It is that time of year again. No, it is not your birthday—it is tax time! For most parents, it is a foregone conclusion that you will claim your qualifying minor children on your personal tax returns, but for parents not living in the same household, it may not be that simple. For these parents, let’s talk taxes.
If you have a Child Support Order entered by the Court, it is time to locate it and read it carefully. Often, a Child Support Order will include a provision setting forth which parent shall claim the children as dependents. But remember, no two orders are alike. Some parents agree that the parent receiving child support will claim the children; others agree that the parent paying child support will claim the children. When there is more than one minor child, the parents may agree to each claim a child. Another option may be that the parents agree to alternate the years in which they will claim the dependent child. Since there are so many possible variations, it is important to review your Child Support Order carefully and understand which parent, pursuant to the Order, is entitled to claim the children.
On the other hand, when a Child Support Order does not contain such a provision, the North Carolina Child Support Guidelines, as set out in our North Carolina General Statutes, assume that the parent who receives a child support payment claims the tax exemptions for the child. Even though the guidelines set forth this assumption, when there is no specific provision in an Order, the United States Internal Revenue Code provides the default rules.
The Internal Revenue Code sets forth special rules for parents who are divorced, separated under a written separation agreement, or live apart at all times during the last six (6) months of the calendar year and who are filing separate tax returns. Under the Code, when the child is in the custody of one or both of the child’s parents for more than one-half of the calendar year, the “custodial” parent shall be entitled to the dependency exemption, unless the custodial parent agrees to release claim to the exemption for the year. Specific to these circumstances (and not necessarily the North Carolina General Statute), the custodial parent means the parent having custody for the greater portion of the calendar year (i.e., more than one-half of all overnights). It is important to remember, if the custodial parent agrees to release the dependency exemption to the noncustodial parent, an additional form must be attached to the noncustodial parent’s return for the taxable year.
If your Child Support Order is silent on this issue, if there is a dispute between parents or if you anticipate a dispute on the issue, it is time to consult an attorney to assist in resolving the matter. Consulting an attorney does not have to result in expensive litigation. Often times, the right attorney can remove the emotional turmoil that arises during conflict and assist parents in coming to a resolution. It is important to remember attorneys do not have a magic wand that resolves all conflict, but when parents are educated about what the law provides and they understand their rights and responsibilities, it can assist in diminishing the conflict and enable the parties to reach a resolution.
Like all annual occasions, tax day will come and go. If you have questions you need answered this year about your Child Support Order or if there is no Child Support Order in place, you should consult a family law attorney before April 15th. Give us a call today or fill out our form, we’re here to help.
Until next year, our tax talk is concluded.