I will answer this question in the context of Utah law because Utah is the jurisdiction where I practice divorce and family law. It could be that other jurisdictions have similar laws or rules, but you will need to inquire with a lawyer who is licensed to practice law in your particular jurisdiction to be sure.
In Utah, the legislature and courts are aware of and wise to 1) those who would try to avoid paying child support 2) those who would try to obtain excessive child support by “self-impoverishing”, i.e., claiming to earn or being able to earn less than they actually do or can. This is why there are code sections and court rules to enable a party and the court to dig into the income history of the opposing party.
For example, the Utah Rules of Civil Procedure provide means by which opposing parties can conduct what is known as “discovery”, which is simply a legal term for the ability to obtain and the process for obtaining documentation and other forms of evidence relevant to the legal action. Through discovery a party can obtain bank, credit card, and other financial institution records of the opposing party. Through discovery a party can obtain business records, titles, can inspect land and buildings, require an opposing party to submit to a physical examination and income-potential evaluations, etc. in an effort to find out the extent of the opposing party’s income or reasonable ability to obtain income, if that party is currently unemployed.
That is not all. The Utah Rules of Civil Procedure also provide that each spouse in a divorce action or each ex-spouse in an action to modify child support must exchange a financial declaration form, with supporting documents. See Utah Rules of Civil Procedure Rule 26.1; parties must, in the financial declaration:
- identify their employer(s) and rate of pay or annual salary
- report their gross monthly income
- calculate their monthly tax deductions and net, after tax income
- identify in detail their monthly expenses for each party and and any spouse, children or other dependents in the household
- business interests and valuation of the business(s)
- financial assets
- real estate interests
- personal property (Such as vehicles, boats, trailers, major equipment, furniture, jewelry, and collectibles)
- debts owed
- and provide:
o For every item and amount listed in the Financial Declaration, excluding monthly expenses, copies of statements verifying the amounts listed on the Financial Declaration that are reasonably available to the party.
o For the two tax years before the petition was filed, complete federal and state income tax returns, including Form W-2 and supporting tax schedules and attachments, filed by or on behalf of that party or by or on behalf of any entity in which the party has a majority or controlling interest, including, but not limited to, Form 1099 and Form K-1 with respect to that party.
o Pay stubs and other evidence of all earned and un-earned income for the 12 months before the petition was filed.
o All loan applications and financial statements prepared or used by the party within the 12 months before the petition was filed.
o Documents verifying the value of all real estate in which the party has an interest, including, but not limited to, the most recent appraisal, tax valuation and refinance documents.
o All statements for the 3 months before the petition was filed for all financial accounts, including, but not limited to checking, savings, money market funds, certificates of deposit, brokerage, investment, retirement, regardless of whether the account has been closed including those held in that party’s name, jointly with another person or entity, or as a trustee or guardian, or in someone else’s name on that party’s behalf.
o If the foregoing documents are not reasonably available or are in the possession of the other party, the party disclosing the Financial Declaration must estimate the amounts entered on the Financial Declaration, the basis for the estimation and an explanation why the documents are not available.
By way of another example, here is an excerpt from 78B-12-203 (Determination of gross income — Imputed income):
(a) When possible, gross income should first be computed on an annual basis and then recalculated to determine the average gross monthly income.
(b) Each parent shall provide verification of current income. Each parent shall provide year-to-date pay stubs or employer statements and complete copies of tax returns from at least the most recent year unless the court finds the verification is not reasonably available. Verification of income from records maintained by the Department of Workforce Services may be substituted for pay stubs, employer statements, and income tax returns.
(c) Historical and current earnings shall be used to determine whether an underemployment or overemployment situation exists.
(6) Incarceration of at least six months may not be treated as voluntary unemployment by the office in establishing or modifying a support order.
(7) Gross income includes income imputed to the parent under Subsection (8).
(a) Income may not be imputed to a parent unless the parent stipulates to the amount imputed, the parent defaults, or, in contested cases, a hearing is held and the judge in a judicial proceeding or the presiding officer in an administrative proceeding enters findings of fact as to the evidentiary basis for the imputation.
(b) If income is imputed to a parent, the income shall be based upon employment potential and probable earnings considering, to the extent known:
(i) employment opportunities;
(ii) work history;
(iii) occupation qualifications;
(iv) educational attainment;
(viii) criminal record;
(ix) other employment barriers and background factors; and
(x) prevailing earnings and job availability for persons of similar backgrounds in the community.
(c) If a parent has no recent work history or a parent’s occupation is unknown, that parent may be imputed an income at the federal minimum wage for a 40-hour work week. To impute a greater or lesser income, the judge in a judicial proceeding or the presiding officer in an administrative proceeding shall enter specific findings of fact as to the evidentiary basis for the imputation.
(d) Income may not be imputed if any of the following conditions exist and the condition is not of a temporary nature:
(i) the reasonable costs of child care for the parents’ minor children approach or equal the amount of income the custodial parent can earn;
(ii) a parent is physically or mentally unable to earn minimum wage;
(iii) a parent is engaged in career or occupational training to establish basic job skills; or
(iv) unusual emotional or physical needs of a child require the custodial parent’s presence in the home.
Utah Family Law, LC | divorceutah.com | 801-466-9277