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Posts Tagged ‘taxes; divorce’

New Year – New Status. Divorce Advice for 2016.

Whether you have been in a troubled marriage or currently separated, 2016 can be the year you get to change your status.  With the upcoming elections, changes are in the air.  Individuals normally do not like change and it is difficult to embrace changes in your marital status.  However with the feel of change in the air, it could be a good time to take that first step forward to changing your personal status. Change has been happening all around us and we comtemplate more changes to come.  

In the previous year, The Supreme Court of the United States made it clear that all states have to recognize same-sex marriages giving civil rights and liberties to every individual. I have personally seen individuals who, for the first time, have had their marriages recognized in the state of Alabama.  It's been an exciting past year.  I have had clients that were in the need of a same-sex divorce and with the Supreme Court ruling were able to get that relief without leaving their home state of Alabama.  

With the changes in healthcare laws, I've had clients who were able to secure their own health care coverage which assisted them in finalizing their divorces.  Some individuals were separated from their spouses with pre-existing conditions that inhibited them from finalizing their divorce.  Once divorced they knew that their coverage would end and getting new coverage may exclude their conditions.  Now with changes in health care, they are free to enroll personally without the denial of their pre-existing conditions.  It has enabled them to be self-sufficient. 

Now with 2016 on the rise, individuals have contacted our firm that are in need of legal asistance to start a new year with new goals.  Divorce can be very challenging but with the right legal team, you can get solutions that are best for you.  In some ways it is easier to make personal changes while your environment is also changing.  2016 can be the year you reach your personal goals.  Let us assist you in any of your family law issues.  We have a dedicated team of attorneys and professionals waiting to help you. 

Call us at (205) 623-1001.

We have information on our website that may answer your questions.  Our blog covers a wide variety of legal topics. See http://bit.ly/1TOm2yM
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Which parent gets to claim the child on taxes?

tax-dollars-e1276903266555In years past, this question was an easy answer.  Moms were getting custody routinely and dads were getting the children every other weekend.  Every parent knows the more dependents you are able to claim the lower your tax bill will cost them.  That is the primary reason parents want the ability to claim their children as dependents.

Today with the ever-changing parenting plans that occur in divorce situations, tax exemptions come up over and over again.  Despite how complicated the parenting plan or visitation schedule becomes, the simple rule-of-thumb is the parent with whom the child has more overnights with is the parent entitled to claim the tax deduction.  When this simple formula is put into place, it separates the line of who is the custodial parent and who is the noncustodial parent.

With all of this in mind, there are ways to simply this decision during a divorce.  Should the parties agree to who can claim the child and some times for which years (even or odd, etc), they can enter into an agreement which creates a contract between them.  Parents can even alternate years which will allow each parent to change their deductions on the years they do not claim the child.

A recent decision from the IRS in May 2013 from the United States Tax Court says that the IRS is not bound by state court rulings that allocate which parent may claim the child for a tax dependent.  So, for federal income tax purposes the the IRS rules govern.  The decision sums up tax dependency by saying that it is the IRS rules and state court orders that determine which parent can claim the children.  Since federal law governs a person's federal returns, they should look to IRS rules.  This makes it impossible for state courts to rule which parent may claim the children on their federal tax returns and that is based upon eligibility set out by the IRS regulations. However, state tax returns may be governed by state court orders.

The state of Alabama defines tax dependent eligibility as the parent who supports the child for more than 50% of his or her support during the tax year.  This ultimately puts the tax dependent claim with the custodial parent since even though a parent pays child support that does not cover more than 50% of that child's support.  This is ordinarily the case but not the rule.  There are a lot of considerations to be taken into account before answering this question.  Consulting a family law attorney will be most helpful in this case.  Our firm handles divorce and child custody cases routinely and the tax question is one that we have litigated in several cases.  Obtaining an opinion and order from the court puts the issue at rest.  Plus the parent who claims the child on their taxes has an order to produce in cases of dispute.  If both parents claim the same child as a tax dependent, the one with an order as proof of tax dependency will win the deduction.  Call us today if you need help in any divorce or child custody case (205) 623-1001.  We are here to help you find real solutions.

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