Child Support and taxes

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stoptothink
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Child Support and taxes

Post by stoptothink » Wed Feb 03, 2016 5:53 pm

Have a feeling this is going to turn into an awkward conversation. Just received a text message from my wife, apparently my daughter's birth father wants to know when we can start alternating years to claim her on our taxes. She is nearly four, we have full custody and up until very recently we didn't receive a penny in child support despite actions on our part to ensure they had a relationship. We filed a report with the state Office of Recovery Services and just at the tail end of 2015 was it completed...we now receive $37/month. We know for a fact that he lied about his income on the ORS paperwork (we are pretty certain he makes over twice what is claimed), but it wasn't worth taking him to court for. Also, childcare for our daughter is ~700/month, in tax year '15 the total was ~$9k - allowing him to claim her would make us not eligible for the child care tax credit.

After I got over the initial shock that he would even ask the question, my reaction was that it would be better if we just cut him a check for a few hundred dollars every other year. How would you handle the situation?

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FelixTheCat
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Re: Child Support and taxes

Post by FelixTheCat » Wed Feb 03, 2016 5:59 pm

I thimk it's state law that the tax deduction goes to the parent that has the majority of the child. You'll have to research further to verify.

You can negotiate the tax deduction to alternate years; I did it with my ex-wife.
stoptothink wrote:.we now receive $37/month.
I just read the amount. $444 annually and he wants the tax deduction? I would politely decline the offer telling him you need the tax deduction to pay for the daycare.
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HueyLD
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Re: Child Support and taxes

Post by HueyLD » Wed Feb 03, 2016 6:01 pm

Is there a clause in the divorce decree that allows the father to claim the child as a dependent as long as he pays court-ordered child support?

Claiming a child could mean big bucks for him in EIC and ACTC.

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Re: Child Support and taxes

Post by Twins Fan » Wed Feb 03, 2016 6:04 pm

Is there a divorce decree or parenting plan through the courts? It should all be laid out in there, if there is.

Otherwise, I would tell him to take her to court if he wants to alternate years like that. You guys have full custody and he pays a whopping $37/month. I say you guys get the child credit.

But, it's all opinions and possible verbal agreements without court paperwork saying what should happen that way.

I'm divorced, pay child support (way more than this guy!), the non-custodial parent, and I agreed from the start the ex could claim the kids each year. I felt it was hers to claim since they were with her the majority of the time. I think he's a knucklehead for asking. Tell him to get lost about it until the courts say to alternate.

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Re: Child Support and taxes

Post by Twins Fan » Wed Feb 03, 2016 6:05 pm

HueyLD wrote:Is there a clause in the divorce decree that allows the father to claim the child as a dependent as long as he pays court-ordered child support?
Wouldn't happen. It's either or, not both get to claim. I believe it's IRS rules that say so.

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HueyLD
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Re: Child Support and taxes

Post by HueyLD » Wed Feb 03, 2016 6:10 pm

Sorry, I meant to say every other year.

However, there are many versions to child dependency claims in the real life situation.

I think the father wants the EIC and ACTC money.

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dodecahedron
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Re: Child Support and taxes

Post by dodecahedron » Wed Feb 03, 2016 6:19 pm

HueyLD wrote:Is there a clause in the divorce decree that allows the father to claim the child as a dependent as long as he pays court-ordered child support?

Claiming a child could mean big bucks for him in EIC and ACTC.
Not legally! If the OP's wife signs a form allowing him to claim the child, he will be eligible only to claim the dependent exemption (subtracting $4K from his taxable income) and for the Child Tax Credit (CTC/ACTC), which could give him a $1,000 credit.

The Earned Income Credit (EIC) can *never*, under any circumstances, be signed away to a parent who lived less than half the year with the child. Nor can the daycare credit go to a parent who lived less than half the year with the child. Even if the OP's wife releases the dependency exemption and CTC/ACTC to the father, he can't claim the EIC or the daycare credit. He also can't claim Head of Household (HoH) filing status based on the child. These tax benefits remain with the custodial parent.

(I am using the shorthand "custodial parent" to mean the parent who lived with the child over half the year. Noncustodial is shorthand for parent who lived with the child less than half the year, including possibly not at all.)

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HueyLD
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Re: Child Support and taxes

Post by HueyLD » Wed Feb 03, 2016 6:28 pm

You are right, but I suspect that the father had in mind getting both the EIC and ACTC by claiming that he had the custody of the child.

That maybe the real life situation and hopefully the IRS has stepped up the enforcement of such action.

Anyway, back to the OP's question. The OP can certainly negotiate a deal with the father if the father is legally allowed to claim the child every other year by the divorce decree. I know divorce couples where the fathers were not getting the dependency exemption because the mothers (custodial parents) refuse to sign form 8332.

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Re: Child Support and taxes

Post by SimonJester » Wed Feb 03, 2016 6:30 pm

stoptothink wrote:How would you handle the situation?
$37 per month wow.

My response would be: If you want that you need to take me back to court, and I plan on hiring a good lawyer to see that child support is raise up by a significant amount.


To put this in prospective in my state if you made minimum wage you would pay $412 per month. If you made minimum wage and only worked 1/2 time you would pay $221. To get $37 of child support I had to put in my monthly income as $90
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Re: Child Support and taxes

Post by Twins Fan » Wed Feb 03, 2016 6:46 pm

HueyLD wrote:Anyway, back to the OP's question. The OP can certainly negotiate a deal with the father if the father is legally allowed to claim the child every other year by the divorce decree.
There would be nothing to negotiate then??

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HueyLD
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Re: Child Support and taxes

Post by HueyLD » Wed Feb 03, 2016 6:50 pm

I know of situations where the father couldn't get the exemption that he is legally entitled to because the mother refused to sign form 8332.

And the father couldn't afford to take her to court.

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stoptothink
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Re: Child Support and taxes

Post by stoptothink » Wed Feb 03, 2016 7:17 pm

HueyLD wrote:Is there a clause in the divorce decree that allows the father to claim the child as a dependent as long as he pays court-ordered child support?

Claiming a child could mean big bucks for him in EIC and ACTC.
Yes, the divorce decree states that they alternate her as a dependent if he pays court-ordered child support. At the time of their divorce he was unemployed and in and out of drug rehab, my wife received zilch until our daughter was 3.5. He actually now has cleaned up and is getting his life in order, even recently got married. The relationship has actually been decent outside of the fact that we don't get financial support. During the ORS investigation they told us they could only count one of his jobs when determining child support, if he works more, that is on him - he has two part-time jobs and very obviously claimed the lower paying one.

After discussing it with my wife, we are probably going to tell him to compute his taxes and see the discrepancy between adding her as a dependent and not - we'll pay the difference. We'll alternate this every year until she is no longer in childcare. I already did the calculations, it's a discrepancy of ~$2500 for us due to certain healthcare expenses and the child care credit this year. It's not really worth rocking the boat because things have improved, but this is unbelievably frustrating.

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stoptothink
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Re: Child Support and taxes

Post by stoptothink » Wed Feb 03, 2016 8:01 pm

SimonJester wrote:

To put this in prospective in my state if you made minimum wage you would pay $412 per month. If you made minimum wage and only worked 1/2 time you would pay $221. To get $37 of child support I had to put in my monthly income as $90
The primary issue is that for some odd reason (as told to us by ORS), they can only claim a single job when calculating child support. So, his "claimed" income is less than half of what he actually earns. They have his gross as something like $1500/month, which I am pretty sure is what he make at his lower paying part-time job. Couple this with the fact that my wife received a promotion and literally doubled her income within a few weeks of filing the claim, and now according to them she earns ~5x what he does...we get $37/month. We discussed it for a while with the ORS rep, there was nothing we could do unless we wanted to go to court. In terms of dollars it would be worth it, but with how little we are likely to get it isn't worth the time, aggravation, and risk it would mess up the improving relationship.

I'm actually OK with the amount of support we receive, but I would like to be able to claim her as a dependent considering how we have bent over backwards to make sure he had a relationship with her and we bare 99.99999% of the cost of raising her.

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Re: Child Support and taxes

Post by leonard » Wed Feb 03, 2016 8:12 pm

Since this is a tax situation, what does a CPA say?
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Re: Child Support and taxes

Post by saladdin » Wed Feb 03, 2016 8:18 pm

Best friend had custody of his son, full custodial, as in he had all legal rights and she had visitation (she saw the kid maybe 6 times in decades) and she had to pay child support (and paid only 1 week out of 18 years). When the boy was about 10 my friend filed taxes claiming him as dependent (as he had done for years) when the IRS notified him that someone else had already used his son's ssn. Yep, the mother filed taxes and claimed him. It took him about 5 years to get it straightened out. He had to go to the local IRS office multiple times.

Now, this was the mid 90's and maybe things have changed but nothing is stopping him from filing and claiming the kid and sticking you with years of paperwork.

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stoptothink
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Re: Child Support and taxes

Post by stoptothink » Wed Feb 03, 2016 8:33 pm

saladdin wrote:Best friend had custody of his son, full custodial, as in he had all legal rights and she had visitation (she saw the kid maybe 6 times in decades) and she had to pay child support (and paid only 1 week out of 18 years). When the boy was about 10 my friend filed taxes claiming him as dependent (as he had done for years) when the IRS notified him that someone else had already used his son's ssn. Yep, the mother filed taxes and claimed him. It took him about 5 years to get it straightened out. He had to go to the local IRS office multiple times.

Now, this was the mid 90's and maybe things have changed but nothing is stopping him from filing and claiming the kid and sticking you with years of paperwork.
My wife was in the midst of dealing with this when we first began dating. He claimed her in '12 despite my wife having full custody, him literally seeing his daughter twice (my wife left him when she found out she was pregnant), and paying zero support. From what I recall, her CPA had little difficulty getting it straightened out because he was in jail and rehab most of the year. I am fairly certain that at this point he wouldn't be that vindictive, but he does apparently have some sense of entitlement because he pays for a single day of childcare every month.

We have full custody, according to the courts he isn't supposed to have anything other than supervised visitation, but in the last six-months we have mutually agreed that he can have her every other weekend as long as he comes and gets her (he lives 2hrs away) and he stays the weekend at his sister's home which is five miles from us. I have to give it to him, he has made great strides in his personal life and he has proven trustworthy in following our set-out guidelines.

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Re: Child Support and taxes

Post by dodecahedron » Wed Feb 03, 2016 8:52 pm

stoptothink wrote:
After discussing it with my wife, we are probably going to tell him to compute his taxes and see the discrepancy between adding her as a dependent and not - we'll pay the difference. We'll alternate this every year until she is no longer in childcare. I already did the calculations, it's a discrepancy of ~$2500 for us due to certain healthcare expenses and the child care credit this year. It's not really worth rocking the boat because things have improved, but this is unbelievably frustrating.
Note that even if your wife signs the Form 8332 allowing her ex to claim your daughter, the two of you retain the right to claim the day care credit, because that credit *always* stays with the custodial parent. Moreover, a parent can claim itemized deductions for medical expenses paid for a child even if the other parent claimed the child as a dependent.

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Re: Child Support and taxes

Post by Twins Fan » Wed Feb 03, 2016 8:53 pm

stoptothink wrote:
HueyLD wrote:Is there a clause in the divorce decree that allows the father to claim the child as a dependent as long as he pays court-ordered child support?
Yes, the divorce decree states that they alternate her as a dependent if he pays court-ordered child support.
Well, then it's pretty much settled. They should be alternating years claiming the kid on taxes. The decree makes the rules unless it gets changed through the courts.

He may agree to the deal where you cut him a check. But, he may push the issue and take it to the courts if you don't let him claim every other year.

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Re: Child Support and taxes

Post by stoptothink » Wed Feb 03, 2016 9:01 pm

Twins Fan wrote: He may agree to the deal where you cut him a check. But, he may push the issue and take it to the courts if you don't let him claim every other year.
That isn't happening. He doesn't have the means and he is well aware that what we have mutually agreed upon (us letting her have her every other weekend) is far more than he can dream of getting from the court as far as visitation. They gave him supervised visitation, he's an ex-con and very recently rehabbed drug addict; we'd go right back to the court ordered once-a-month supervised visits if he made it difficult. This is more an issue of keeping the peace; going to court, while a major hassle for us, would be really bad for him.

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Re: Child Support and taxes

Post by Twins Fan » Wed Feb 03, 2016 9:06 pm

You just said he's really turned his life around and recently married. Don't be so sure he's scared of going to court.

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stoptothink
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Re: Child Support and taxes

Post by stoptothink » Wed Feb 03, 2016 9:13 pm

Twins Fan wrote:You just said he's really turned his life around and recently married. Don't be so sure he's scared of going to court.
He's turned his life around as in he isn't in jail, has (according to his program) been clean for a few months, and has a pair of part-time jobs. He doesn't even have a driver's license due to a series of DUIs, he has to take the train to come see his daughter (I give him respect for that). The new wife, he met in rehab and together they live with her parents. We have previously discussed that situation with a family attorney, around the same time we filed the ORS claim - even if he could pay for it, he has zero interest in going to court. Of that we are sure of.

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Re: Child Support and taxes

Post by Twins Fan » Wed Feb 03, 2016 9:34 pm

Then what are you asking the forum this question for? You seem to know how you want to handle this and have him by the short hairs, so....

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Re: Child Support and taxes

Post by IPer » Wed Feb 03, 2016 9:55 pm

The reasoning sounds all wrong and can only lead to further complications:

1. It seems you don't owe him the alternate deduction claim privilege as he broke that contract.
2. You should review IRS law as to who can legally claim a dependent after #1 and that word is final.
3. In light of #1 and #2 you are probably supposed to claim the dependent you do not owe him any money.
4. If you desire to give him donation money it should be very clear that that is what you are doing
and that he is not entitled to that money or you might get into more sticky waters. You could state
that it is not for the above legal sounding reasons because it is not but that you appreciate he has
stayed out of jail and is committed to his daughter as evidenced by taking the train for visits.

Best of luck!
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Re: Child Support and taxes

Post by TomatoTomahto » Wed Feb 03, 2016 10:04 pm

He is trying to turn his life around. You might have him in an uncomfortable position as regards court, and your daughter is still too young to understand, but I sincerely suggest that you take the high road. I did, and thought I was a loser because not only did I pay extortionate amounts of child support, I also was estranged from my son due to my ex's brainwashing. Finally, in his mid 20's, he started to see with his own eyes, and we are reunited.

By one reckoning, our situations are not that similar, but kids eventually think for themselves, and your daughter's life will only be enhanced by having 3 (or 4) loving parents. I know it rankles to have him claim his/your daughter on his taxes, but take the long view.
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stoptothink
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Re: Child Support and taxes

Post by stoptothink » Thu Feb 04, 2016 10:36 am

Twins Fan wrote:Then what are you asking the forum this question for? You seem to know how you want to handle this and have him by the short hairs, so....
The opening post was more of a rant, wondering what exactly made him believe he was entitled to the tax benefits. Despite the court decree, I was pretty much assuming (wrongly) that this would never be an issue, seeing as we are responsible for virtually all her care (financially and otherwise). We have spent the last 2yrs attempting to build a decent relationship with him, for the sake of our daughter. It's very amicable at this point. Yes, essentially there is nothing he can do other than make our lives miserable by filing first and claiming her as a dependent, maybe begging friends and family for money to take us to court so he could get the every-other-year tax benefit (but lose the agreed upon visitation schedule) out of pure spite, but we are reasonable adults trying to set a good example for our daughter and my wife and I have been committed to taking the high road when dealing with him.

I wasn't aware of the intricacies of the tax situation, particularly this 8332 form. Am I correctly understanding that we could still get the child tax credit and child care credit even on the years he claims her as a dependent since we are the custodial parents? If that is the case, my frustration is significantly minimized.
Last edited by stoptothink on Thu Feb 04, 2016 10:39 am, edited 1 time in total.

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Re: Child Support and taxes

Post by montanagirl » Thu Feb 04, 2016 10:38 am

saladdin wrote:Best friend had custody of his son, full custodial, as in he had all legal rights and she had visitation (she saw the kid maybe 6 times in decades) and she had to pay child support (and paid only 1 week out of 18 years). When the boy was about 10 my friend filed taxes claiming him as dependent (as he had done for years) when the IRS notified him that someone else had already used his son's ssn. Yep, the mother filed taxes and claimed him. It took him about 5 years to get it straightened out. He had to go to the local IRS office multiple times.

Now, this was the mid 90's and maybe things have changed but nothing is stopping him from filing and claiming the kid and sticking you with years of paperwork.

Yes, may already have happened fro 2015. He doesn't have to wait to file. Still a mess to straighten out that happens too frequently.

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Re: Child Support and taxes

Post by Traveler » Thu Feb 04, 2016 8:06 pm

I have no idea what the law is but you said that up until very recently he wasn't paying any child support but if he is paying child support then he can claim the child every other year. So what about back child support (i.e. he needs to catch up before he get the tax benefit)? Or he needs to pay an entire year before he gets the tax benefit? What would stop him from getting the tax benefit and then stopping payments? Not that $37 will break you, but I wouldn't trust him given your version of his track record.

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stoptothink
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Re: Child Support and taxes

Post by stoptothink » Thu Feb 04, 2016 8:21 pm

Traveler wrote:I have no idea what the law is but you said that up until very recently he wasn't paying any child support but if he is paying child support then he can claim the child every other year. So what about back child support (i.e. he needs to catch up before he get the tax benefit)? Or he needs to pay an entire year before he gets the tax benefit? What would stop him from getting the tax benefit and then stopping payments? Not that $37 will break you, but I wouldn't trust him given your version of his track record.
As long as he has trackable income, he can't stop paying. That's how ORS works in our state, his wages are garnished and we get a direct deposit. He can certainly hide his income by getting paid under the table or other little tricks, and that is exactly what we believe is happening, but as long as he has w2 income we get the $37/month. I do not believe there was any agreed upon child support in the divorce decree, at the time of the divorce he had been unemployed for quite some time, had recently filed bankruptcy, and was actually out on bail for a drug charge. So, as far as I know, he has paid all of $111 in her entire 4yr life, but is considered current.

My wife woke up this morning pretty angry. Last night she was definitely leaning towards just giving it to him to keep the peace, but today she told me she wants to have a stern talking to him. Pretty sure she is intending to tell him that if he wants claim her, then we go exactly by the divorce decree, meaning he only gets supervised visitation for a few hours every other weekend. I don't necessarily think that is the best decision, and I expressed this, but I defer to her when dealing with him. It'll likely be a few more days before that conversation takes place, who knows what she'll decide then?

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Re: Child Support and taxes

Post by desertbandit442 » Fri Feb 05, 2016 7:42 am

I work in the tax industry. By the custodial parent signing the Form 8332, the only two tax breaks the noncustodial parent can use are the dependency exemption, which is $4,000 per dependent for 2015, and the Child Tax Credit of $1,000. All other tax breaks/credits remain with the custodial parent, like the Dependent Care Credit, Earned Income Credit (if you qualify), etc. Also if the child support is not paid, the custodial parent can revoke the Form 8332.

I must add, the above assumes the IRS requirements for a qualifying child are met.
Last edited by desertbandit442 on Fri Feb 05, 2016 8:57 am, edited 1 time in total.

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Re: Child Support and taxes

Post by stoptothink » Fri Feb 05, 2016 8:46 am

Update: well, problem solved (hopefully). We actually re-read the divorce decree last night (which obviously should have been the first thing we did), which includes the stipulation that he pay for half of childcare and healthcare expenses. So, by the divorce decree he actually owes us ~$6k from last year alone. My wife is going to scan a copy of the decree with those portions highlighted to him this morning, hopefully he'll get the hint without us needing to go further.

We are quite content with the current situation, like how the relationship is progressing, and aren't really in need or want for him to financially contribute more, but we'd like him to be understanding of all we have done to make this amicable and stop trying to push the limits.

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