When you are going through a divorce, one of the most pressing concerns is often money — specifically, how much financial support will be paid or received, and how those numbers are determined. Whether the conversation is about spousal support or child support, courts do not always rely solely on what someone currently earns. In many cases, a judge will also look at what a person is reasonably capable of earning. Understanding the difference between actual income and earning potential can help you make more informed decisions as you move through the divorce process.
If you have questions about how income is calculated in your case, do not wait — contact us today through our online contact form or call us at (262) 205-0705 to speak with a member of our team.
What Is the Difference Between Actual Income and Earning Potential?
Actual income is straightforward — it is the money a person currently brings in from their job, business, or other regular sources. Earning potential, on the other hand, refers to what a person could reasonably be making based on their education, skills, work history, and the job market in their area.
Courts make this distinction because financial support decisions are meant to reflect what is fair and sustainable for everyone involved, including any children. If one spouse voluntarily left a well-paying career, took a lower-paying job, or significantly reduced their hours around the time of a divorce, a judge may not take those numbers at face value. The goal is to arrive at a figure that reflects a person's true financial capacity, not just a snapshot in time that might be misleading.
Why Courts Look Beyond a Paycheck
It might seem straightforward to simply look at someone's current pay stub and base support calculations on that number. But courts in Wisconsin are aware that people sometimes make financial decisions — intentionally or not — that affect how income appears on paper during a divorce.
A spouse who was earning $90,000 a year and suddenly reports only $30,000 after filing for divorce may raise questions for the court. Similarly, a stay-at-home parent who has a college degree and years of prior professional experience may be expected to re-enter the workforce. In these situations, a judge may assign what is called "imputed income" — an income figure that reflects what the person could be earning, rather than what they are currently earning.
What Is Imputed Income?
Imputed income is a legal term for an assigned income amount that a court uses when it determines that someone is voluntarily unemployed or underemployed. "Voluntarily underemployed" means that a person is working less — or earning less — than they reasonably could be, given their background and opportunities.
For example, if someone with a nursing license is working part-time at a retail store, a court may impute income based on what a full-time nurse in the area typically earns. The court is not punishing that person — it is simply trying to make sure support calculations reflect a realistic financial picture. This concept applies in both spousal support and child support cases.
How Courts Determine Earning Potential
Judges do not guess when it comes to earning potential. They look at a range of factors to arrive at a reasonable figure. In Wisconsin divorce cases, a court may consider the following when evaluating what someone is capable of earning:
- Educational background, including degrees, certifications, or vocational training
- Prior work history and the type of positions previously held
- Length of time out of the workforce and the reason for that absence
- Current job market conditions for that person's field or industry
- Physical and mental health, which may limit or affect employability
- Geographic location and what similar roles pay in that area
- Any efforts made to find employment or pursue additional training
These factors are weighed together, not in isolation. A person who has been out of the workforce for ten years to raise children will be evaluated differently from someone who recently quit a high-paying position without explanation.
Once the court has reviewed these considerations, it may determine that a person's earning potential is higher than their current income reflects. That determination can then influence how spousal support or child support is calculated.
How This Affects Spousal Support
Spousal support — sometimes called maintenance or alimony — is financial support paid by one spouse to the other after a divorce. It is intended to help a lower-earning spouse maintain a reasonable standard of living while they work toward greater financial independence.
When a court is deciding whether spousal support is appropriate and how much it should be, both spouses' incomes and earning potential are taken into account. If the paying spouse is voluntarily earning less than they are capable of, the court may base the support calculation on their imputed income rather than their actual income. Likewise, if the receiving spouse has the ability to work but has not made reasonable efforts to do so, the court may reduce or limit the support they receive.
Spousal support in Wisconsin is not automatically permanent. Courts often expect the receiving spouse to take steps toward self-sufficiency, especially if they are relatively young or have marketable skills. The longer a marriage lasted and the greater the income disparity, the more likely meaningful support will be awarded — but earning potential still plays a role in how the amount and duration are set.
How This Affects Child Support
Child support calculations in Wisconsin follow a specific set of guidelines established by state law. These guidelines generally use both parents' gross incomes — that is, income before taxes and deductions — to determine how much each parent contributes to the financial needs of their children.
When one parent appears to be earning far less than their background would suggest, a court may impute income to ensure the child support calculation is fair. Courts take the financial well-being of children seriously, and a parent who voluntarily reduces their income does not automatically reduce their child support obligation as a result.
It is also worth noting that child support and custody arrangements can affect each other. The amount of time each parent spends with the children may influence how support is calculated, but income — actual or imputed — remains a central part of the equation.
Common Situations Where Earning Potential Becomes a Factor
Understanding when imputed income is most likely to come up can help you prepare for your case. The following are situations where courts commonly evaluate earning potential alongside or instead of actual income:
- A spouse who quit their job or reduced hours shortly before or after filing for divorce
- A self-employed spouse who has flexibility in how much income they report
- A parent who has chosen to remain out of the workforce beyond what parenting responsibilities require
- A spouse who turns down job offers or promotions during the divorce process
- A spouse who accepts a position well below their qualifications without a clear reason
In each of these situations, the court has the authority to look past the reported income and make its own assessment. Having clear documentation of your own financial situation — and your spouse's — can make a significant difference in how these questions are resolved.
What You Can Do to Protect Your Interests
If you believe your spouse is hiding income or intentionally working below their capacity, it is important to raise this with your attorney as early as possible. There are legal tools available to gather financial information, including document requests and a process called discovery, where both sides are required to share financial records. A family law attorney can help you identify red flags and present the court with a clear, honest picture of both parties' finances.
On the other hand, if you are the spouse whose income or earning potential is being questioned, it is equally important to be prepared. Documentation of your job search efforts, health limitations, childcare responsibilities, or retraining plans can all help the court understand your situation more fully. Courts want to be fair — and giving them accurate, complete information is the best way to make that possible.
Talk to a Brookfield Family Law Attorney About Divorce, Spousal Support, and Child Support
Navigating the financial side of divorce is rarely simple, and questions about income and earning potential can add another layer of complexity to an already difficult time. Whether you are trying to understand what support you may be entitled to or are concerned about how your own financial situation will be evaluated, having a knowledgeable attorney by your side can make a meaningful difference.
As a multigenerational law firm, The Law Offices of Mark S. Knutson, S.C. has spent decades walking alongside families in Southeast Wisconsin through some of life's most challenging moments. We take the time to listen, answer your questions honestly, and help you move forward with clarity and confidence. If you are facing divorce and need guidance on spousal support, child support, or how courts evaluate income in your case, we are here to help.
Reach out today by calling (262) 205-0705 or filling out our online contact form. Evening and weekend appointments are available for your convenience.