In a high-earner divorce, the income figure on a tax return is the opening position, not the answer. New York courts impute income in divorce cases where a party's reported earnings understate what that party earns, has earned, or could earn, and the imputed figure then drives both maintenance and child support. This article covers the statutory basis for imputation, the categories of evidence Second Department courts accept, the common patterns in business-owner and executive cases, and how each side builds or defends the record.

Where Imputed Income Comes From in New York Divorce Law

Maintenance and child support in New York run on a single definition of income. For temporary maintenance, DRL § 236(B)(5-a)(b)(4) defines income by reference to the Child Support Standards Act; for post-divorce maintenance, DRL § 236(B)(6)(b)(3) does the same. The Child Support Standards Act, in turn, authorizes the court to look past reported earnings.

Two clauses carry the weight. Under DRL § 240(1-b)(b)(5)(iv), "at the discretion of the court, the court may attribute or impute income from such other resources as may be available to the parent." The statute lists "non-income producing assets," perquisites such as "meals, lodging, memberships, automobiles" provided as part of compensation, "fringe benefits provided as part of compensation for employment," and "money, goods, or services provided by relatives and friends." Under DRL § 240(1-b)(b)(5)(v), the court may include "an amount imputed as income based upon the parent's former resources or income" where it finds that a parent "has reduced resources or income in order to reduce or avoid" a support obligation.

Because the maintenance statutes incorporate that definition, the same imputation authority applies to temporary and post-divorce maintenance. One imputed figure typically feeds every support calculation in the case.

The Second Department Standard

The governing standard gives trial courts wide latitude. A court has "considerable discretion in determining whether income should be imputed to a party," and its credibility determinations "are accorded deference on appeal." Diliberto v. Diliberto, 230 A.D.3d 637 (2d Dep't 2024) (quoting Tuchman v. Tuchman, 201 A.D.3d 986, 990 (2d Dep't 2022)). The court "need not rely upon a party's own account of his or her finances" and may impute income based on "the party's past income or demonstrated future potential earnings." Id.

Where a party's account of his or her finances is not credible, the court may find "a true or potential income higher than that claimed." Albano v. Albano, 230 A.D.3d 723 (2d Dep't 2024) (citing Castello v. Castello, 144 A.D.3d 723, 725 (2d Dep't 2016)). Both Diliberto and Albano arose in Nassau County Supreme Court. In Diliberto, the Second Department affirmed imputation of $175,000 to one spouse and $45,000 to the other. In Albano, it affirmed imputation of $221,000 to a spouse whose claimed income could not be squared with the household's spending.

The discretion has limits. An imputation will be set aside where the record does not support it or the court improvidently exercised its discretion. Weiss v. Nelson, 196 A.D.3d 722, 724 (2d Dep't 2021). The party seeking imputation has to give the court a factual basis for the number, not an assertion that the other side must earn more.

Four Patterns That Produce Imputation in High-Earner Cases

The Business Owner Whose Return Understates Cash Flow

A spouse who owns an operating business controls how income is reported. Salary can be set below market, distributions deferred, and personal expenses run through the company: vehicles, phones, travel, meals, club memberships, family members on payroll. DRL § 240(1-b)(b)(5)(iv)(B) reaches perquisites to the extent they constitute expenditures for personal use or confer personal economic benefits. The analysis starts with the business's general ledger, bank statements, and credit card statements rather than with the individual return, and frequently requires a forensic accountant to normalize the business's expenses and identify what the owner receives.

The Lifestyle Gap

Albano illustrates the most direct route to imputation: the household's documented spending exceeds the income either spouse reports. Where the family lived on substantially more than the reported income would support, and the difference was not funded by debt or depletion of savings, the court can infer that the income was there. The proof is a lifestyle analysis built from bank and card statements over several years, matched against tax returns and the Statement of Net Worth.

The Executive or Professional Who Steps Down

A spouse who leaves a high-paying position shortly before or during the action, or who shifts to part-time work without a credible reason, invites imputation at the former earnings level under DRL § 240(1-b)(b)(5)(v). The question is whether the reduction was made to reduce or avoid the support obligation. Courts look at timing, the reason given, whether comparable positions were available, and the party's efforts to find equivalent work. Past income from W-2s, offer letters, and compensation statements anchors the imputed figure.

The Spouse Supported by Family Money

Regular gifts from parents, payment of a spouse's rent or tuition by relatives, and the use of family-owned property all fall within "money, goods, or services provided by relatives and friends" under DRL § 240(1-b)(b)(5)(iv)(D). These arguments arise most often in families where one spouse has access to trust distributions or family business payments that do not appear on that spouse's return. Imputation on this ground requires showing that the support is regular and available, not a one-time gift.

Imputation Applies to the Lower-Earning Spouse as Well

Imputation is not limited to the monied spouse. A spouse seeking maintenance who has the capacity to work but does not can have income imputed, which reduces the guideline award. In Diliberto, the Second Department affirmed imputation of $45,000 to the wife because she did not show, through expert testimony or otherwise, that her claimed medical condition prevented her from earning that amount.

The practical point for the spouse seeking support: a claimed inability to work requires proof. Medical records, a vocational evaluation, or testimony explaining a long absence from the workforce should be developed early. The temporary and post-divorce maintenance statutes treat a history of limited participation in the workforce as a relevant factor, and the record has to show what that history was and why it matters.

Building the Record for Imputation

Imputation cases are evidence cases. The party seeking imputation needs a number and a documented basis for it, and the strongest records combine several sources.

Tax returns for at least three to five years, with all schedules and K-1s, establish the reported baseline and its trend. Business records (general ledgers, bank statements, credit card statements, payroll records, and loan applications) show what the business pays for and what the owner draws. Loan and credit applications deserve particular attention: a spouse who reported one income to a lender and another to the court has a credibility problem the court will weigh. The Statement of Net Worth is sworn, and inconsistencies between it and the documentary record become impeachment material at trial.

For the executive or professional who reduced income, the record includes prior compensation statements, offer letters, bonus and equity history, and evidence of the job market for comparable roles. A vocational expert can testify to earning capacity where the party claims no equivalent position exists.

For the party defending against imputation, the response tracks the same categories. Business expenses need a documented business purpose. A career change needs a credible reason supported by contemporaneous evidence, not an explanation constructed after the action was filed. Family support needs to be shown as discretionary and irregular if that is what it was. The defense loses most often where the party's own testimony is the only evidence offered.

Timing: Temporary Maintenance, Trial, and Post-Judgment

Imputation arises at three points. On an application for temporary maintenance and child support, the court works from the sworn Statements of Net Worth and limited documentation, and the imputed figure, if any, is provisional. At trial, the full record is before the court, and the imputed figure set there governs the final award. After judgment, imputation returns on modification applications, most often where the payor claims a reduction in income and the payee argues the reduction was voluntary.

Counsel in Nassau, Suffolk, Queens, and Westchester Supreme Court matrimonial parts should treat the temporary maintenance stage as the point at which the imputation record begins, not the point at which it is decided. Discovery demands served early, directed at business records and lifestyle spending, shape what the court can find at trial.

FAQ

Can a court in New York assign me an income I do not earn?

Yes. Under DRL § 240(1-b)(b)(5)(iv) and (v), incorporated into the maintenance statutes, a court may impute income based on past earnings, demonstrated earning potential, perquisites, and support from family. The court must have a factual basis in the record for the imputed figure. Diliberto v. Diliberto, 230 A.D.3d 637 (2d Dep't 2024).

My spouse owns a business and reports a low salary. What can the court do?

The court is not bound by a party's own account of his or her finances and may find a higher true or potential income. Albano v. Albano, 230 A.D.3d 723 (2d Dep't 2024). Business records, personal expenses paid by the company, and the household's actual spending are the usual basis. A forensic accountant is often necessary.

I left my job during the divorce. Will the court impute my old salary?

It may, if the court finds the reduction was made to reduce or avoid a support obligation. DRL § 240(1-b)(b)(5)(v). The timing of the change, the reason for it, and evidence of efforts to find comparable work are the deciding facts.

Can income be imputed to the spouse who is asking for maintenance?

Yes. A spouse who can work but does not may have income imputed, which reduces the maintenance award. In Diliberto, the Second Department affirmed imputation to a spouse who did not prove that her medical condition prevented her from working.

Working With Counsel on Income and Support Issues

Imputed income disputes are decided on the financial record each side builds, beginning with the first discovery demands. Michel Law represents spouses on both sides of these disputes in high-net-worth divorce matters in Nassau, Suffolk, Queens, Kings, Bronx, and Westchester. Related reading: What the Spousal Maintenance Cap Actually Means in New York and, for spouses planning ahead, prenuptial agreements.

If you are facing a divorce in which income is disputed, contact Michel Law for a confidential consultation at (516) 440-3440 or through our contact form.