Imputed Income in Child Support: What Self-Employed Parents Need to Know
- Michelle Rakowski
- Sep 11
- 3 min read
One of the most misunderstood concepts in family law is imputed income. Parents, especially those who are self-employed, often assume that the income they report on their taxes will be the same number used to calculate child support. Unfortunately, it’s rarely that simple.
Courts and mediators know that reported income doesn’t always reflect financial reality. When the numbers don’t add up, or when someone appears to be underreporting, imputed income comes into play. And when it does, the results are often very different than what a parent was expecting.
What Is Imputed Income?
Imputed income is when a judge (or sometimes a mediator guiding a settlement) assigns a higher income to a parent than what’s officially reported.
This usually happens when:
The parent is self-employed and deducts many personal expenses through their business.
The parent reports an income that doesn’t match their lifestyle or budget.
The parent is intentionally unemployed or underemployed.
In other words, if it looks like you’re making more than you say you are, your income may be imputed.
A Real-Life Example of Imputed Income
Not long ago, I worked with a self-employed contractor who reported making only $15,000 a year. On paper, that was his gross income. However, when we reviewed his actual monthly budget, it revealed that he needed approximately $5,000 per month to cover his basic living expenses. That math doesn’t work. Someone reporting $15,000 a year would bring home less than $1,000 a month after taxes. It was obvious he was living on much more than that.
In mediation, I tried to help him see the benefit of being proactive. We could have reverse-engineered a fair income for child support. Instead, he grew defensive. I reminded him: if this goes to court, no judge is going to believe you only make $15,000 a year. And when that happens, imputed income is almost guaranteed.
How Courts Handle Imputed Income
Judges don’t look kindly on underreporting. When child support calculations don’t reflect reality, they have the power to impute income at a higher level.
For example:
A parent I worked with, who reported $50,000 annually, had their income imputed at $85,000 by a judge, plus responsibility for additional child-related expenses.
Business owners who write off personal expenses such as cars, meals, phones, and clothing often see those amounts added back into their “real” income.
The bottom line: the court will not allow children to go unsupported because of creative accounting.
Why Mediation Helps With Imputed Income
Mediation provides a unique opportunity for parents to deal with income disputes before they escalate to court.
In mediation, we:
Require full financial disclosure up front.
Review both reported income and actual budgets.
Reverse-engineer a realistic income based on spending.
Create support arrangements that feel fair and sustainable.
This proactive approach not only builds trust but also helps parents avoid the harsher outcomes that can come with court-imposed imputed income.
Children Deserve Fair Support
At the end of the day, imputed income isn’t about punishing parents. It’s about ensuring children are supported fairly. If you’re self-employed, the best approach is transparency. Hiding cash income or underreporting might feel like an advantage in the moment, but it usually backfires. Being reasonable in mediation gives you more control over the outcome and demonstrates that you take your financial responsibility seriously.
Next Steps
If you’re concerned about imputed income or navigating child support as a self-employed parent, mediation can help you find fair, realistic solutions.
👉 Contact Alliston Resolutions today to book a consultation and learn how mediation prevents income disputes from spiralling into costly court battles.
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