Potential income during a divorce.

In Minnesota, children have the right to be supported financially by both parents. Minnesota law presumes, therefore, that both parents are capable of working and earning income to provide that support. Child support is calculated on an "Income Shares" model which assumes that each parent is providing support for the couple's children according to his or her abilities.

Needless to say, not all Minnesota parents embrace the duty to support their children as fully as others. Some parents go so far as to remain deliberately unemployed or underemployed in order to reduce their child support obligations. How does a court arrive at a fair child support award in these circumstances?

Imputing Potential Income in Minnesota Child Support Cases

If a parent is voluntarily unemployed or underemployed, working less than full-time, or if there is no direct evidence of parental income, a Minnesota court will base a child support award on "potential income." The concept of potential income presumes that a parent can be gainfully employed on a full-time basis, which generally means a 40-hour work week. This is a rebuttable presumption, however, which means a parent may present evidence to demonstrate why the court should not presume the parent should be working full-time.

The court determines what this potential income would be in one of three ways. The court may arrive at potential income by evaluating the parent's probable level of earnings based on occupational qualifications, recent work history, the local job market and earnings levels in the parent's community. Alternately, if a parent is receiving worker's compensation or unemployment, potential income may be calculated based on the actual amount of the benefit the parent is receiving. A court may also calculate potential income by determining the amount the parent could earn if employed full-time at 150 percent of federal or Minnesota minimum wage, whichever is higher.

Obviously, not all Minnesota parents are employed on a full-time basis, and many have very good reasons for that. Under what circumstances will a court decline to base a child support award on potential income imputed to a parent?

When Potential Income Is Not Applied

The idea of having potential income imputed may be particularly upsetting to stay-at-home parents who have sacrificed career and earning ability so that they could be available for their children's needs. Naturally, Minnesota courts don't want to penalize parents for taking good care of their own children! When considering the situation of a stay-at-home caretaker parent, courts will look at what the parents' child care arrangements were prior to the child support action; in other words, did the parent become a stay-at-home caretaker just when child support became an issue?

Courts will also consider the stay-at-home parent's employment history and earnings, including how recently he or she was last employed. Another factor is how much it would cost the parent to be employed, in terms of things like day care and transportation, versus how much the parent would likely earn. Courts also take into account the children's ages and health, including any special needs, and the availability of child care. Be aware, however, that this assumes that the child being cared for by the stay-at-home parent is the child of both parties to the child support action. If the child in question is a non-joint child, potential income will be imputed.

There are other circumstances in which potential income is not imputed to a parent. A parent will not be considered "voluntarily unemployed or underemployed" if he or she can show that the employment situation is temporary, and will ultimately lead to increased income. Similarly, if the situation represents a true career change with a benefit that will outweigh the temporarily diminished income, potential income will not be applied. Parents who are self-employed and experiencing a reduction in income will not have income imputed to them if they can show that the reduction in their income is due to economic conditions that have a direct impact on their source of income. The court also will not assign income to a parent who is physically or mentally incapacitated or is incarcerated, unless the incarceration is for non-payment of child support.

It is risky to assume that just because you have a legitimate reason for being unemployed, or employed less than full-time, the court will accept your reason when calculating child support. It's best to have a knowledgeable family law attorney who can advocate for you, in order to avoid the court making assumptions about how much you could or should be earning. Please contact us at Mundahl Law with any questions you have about how potential income and your Minnesota child support calculations. We look forward to working with you.