How Divorced Ohio Parents Can Claim Dependent Children

Posted on: June 22, 2012

Many people going through a divorce have questions about what to do about claiming their dependent children on their tax returns. When and how a person can claim a child following a divorce depends on several factors.

In Ohio, Courts may accept the agreement reached by the parties. If no such agreement exists, the Court must then award the tax exemption to the parent for whom the exemption would serve to further the child’s best interest. There are several variables to this test including: net tax saving, the financial condition of both parties, the amount of time each spends with the child, the eligibility of either party for the earned income tax credit and a catchall category of “any other relevant factor.”

Judges should not automatically award the exemption to the party with the higher income; a real balancing test should take place. It’s also important to realize that at high-income levels the exemption is phased out, thus reducing its value to that party. The same thing occurs for those receiving the earned income tax credit, as they may not receive the full value of the exemption.

These Ohio specific rules can also be affected by the criteria set forth by the IRS. First, and fairly obviously, the child in question must actually be your child or a descendent of your child. This can be either through birth, adoption or foster parenting. The child in question is also permitted to be a sibling, half-sibling, stepsibling or a descendant of any of these.

The child also needs to be younger than 19, or 24 if he or she is a full-time student. Another odd but fairly obvious requirement is that the child be younger than the person claiming him or her. The only caveat to the age requirement is if your child is permanently disabled, in which case you can claim him or her as a dependent regardless of age.

Beyond these two factors, the IRS also looks to the child’s residency throughout the year. Typically, you are permitted to claim a child as a dependent if he or she resided with you for more than half of the year. Of course, in shared custody situations, this can get tricky. The residency requirement means that parents with primary custody of their child will usually be the ones who are able to claim them as dependents.

If additional factors have been met it’s possible for a non-custodial parent to claim a child as a dependent. First, the parents must be legally divorced, separated under a written separation agreement, or be living separately for at least the past six months. Second, the child must have received more than half of his or her financial support over the year from one or both parents. Third, the child must have been in the custody of one or both of the parents for more than half of the year. Fourth, the custodial parent who would otherwise be able to claim the child must sign a form declaring that they will not claim that child as a dependent for that tax year. The non-custodial parent must then attach this declaration to their tax return.

Determining exactly what “non-custodial parent” means is complicated. According to IRS rules, the custodial parent is the parent with whom the child lived for the greater number of nights in the year. If the parents separated during the tax year in question, and the child lived with both parents prior to their separation, then the custodial parent is the one with whom the child lived for the greater number of nights after the separation.

 In the rare event that a child spent an exactly equal number of nights with both parents, then, oddly, the custodial parent is deemed to be the one with the greater adjusted gross income.

If you find yourself facing the prospect of divorce, contact an experienced Ohio family law attorney who can help guide you through the difficult process. Count on the expertise of Twinsburg family law attorney Carol L. Gasper.

Source: “Claiming Children as Dependents After a Divorce,” by Amanda Gilloly, published at Patch.com.

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Attention Baby Boomers: Your divorced mom (or dad) may be entitled to additional Social Security benefits

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Attention Baby Boomers: Your divorced mom (or dad) may be entitled to additional Social Security benefits

Posted on: June 8, 2012

For many senior citizens Social Security benefits are essential to not only their retirement but to their continued financial existence. If you’re a baby boomer in charge of helping with your parents’ finances or a retiree in need of income, then you should know that under certain circumstances you could be entitled to additional money from the Social Security Administration. If a woman (or a man, the law is gender neutral) is divorced or has been married more than once, or her husband delayed taking Social Security, she might be entitled to a bigger monthly benefit than she is currently receiving. Though the difference may not be enormous, it could be welcome relief to someone on a fixed income.

Though the Social Security regulations can affect both men and women, the fact that women typically earn less over their working lives means that they are more likely to be collecting less in benefits then they may be entitled to due to the earnings of a former spouse. The rule says that an individual is entitled to collect Social Security benefits according to one of the following formulas: 1) based on his or her own earnings history; 2) 50% of his or her spouse or former spouse’s benefit if it is greater than their own; or 3) 100% if the former spouse is now deceased.

There are a few specific requirements that must be met to receive this upward revision in benefits: 1) the marriage must have lasted 10 years or longer, and 2) the individual seeking a former spouse’s benefit must currently be unmarried, unless the second marriage occurred after the age of 60.

Enough with the rules, you may be asking how this would work in practice. Here’s a good example: Let’s say your mom only ever worked part-time while raising you kids. She’s now retired and receives an $800 per month Social Security check. Her former husband (your dad) made more money down at the plant, working longer hours over a longer span of time and now brings home a $2,000 per month Social Security check. Rather than continue collecting the $800, your mother is entitled to collect $1,000 per month if your dad is still alive and the full $2,000 if he is deceased. As an added bonus, if the Social Security Administration determines someone is eligible for increased benefits then that person will receive retroactive benefits going back for six months.

This increase in benefits is important not only for the senior in need of money but for the family members watching over their elderly loved ones. If you find yourself facing the prospect of divorce, contact an experienced Ohio family law attorney who can help guide you through the difficult process. Count on the expertise of Twinsburg family law attorney Carol L. Gasper.

Source: “Boosting Mom’s Social Security Payments,” by Ellen E. Schultz, published at WSJ.com.

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Treasury Department Decision May Leave Those Behind on Child Support Penniless

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Treasury Department Decision May Leave Those Behind on Child Support Penniless

Posted on: June 1, 2012

According to an article in USA Today, a big, though unanticipated change is in the works that could severely impact those behind on their child support payments. The change is the result of an attempt by the Treasury Department to reduce money spent by mailing out paper checks. The federal government will begin making government benefits payments electronically in March of 2013. This means that the paper checks that many rely on to shield a portion of their monthly income from states attempting to collect back child support will disappear.

States have long had the power to put a freeze on the bank accounts of those who are behind on their child support obligations. A relatively recent ruling by the Treasury Department also permits states to freeze Social Security, disability and veterans’ benefits that appear in the delinquent parents’ bank accounts. Once the decision to eliminate paper checks is implemented, some 275,000 people could lose access to all of their income.

This presents huge problems for a certain segment of the population, typically poor men substantially behind on their child support payments. There are plenty of instances where such payments are decades old and involve children who have long since grown up. Much of the money owed is for interest and accumulated fees. Of the money that is collected most will go to the states, not to the children of the men who were owed the money. States are authorized to retain this money as repayment for the years they spent providing welfare services for the children.

Beginning next March the Treasury Department will deposit all federal benefits directly into bank accounts or load them onto prepaid debit cards. No matter which method, state governments will then be allowed to access the money. States are currently allowed to garnish 65% of government benefits an individual is entitled to before they are disbursed. This same limit will not apply once the money has been wired to an account (or a prepaid debit card).

Though the goal is a good one, the chosen method will likely be counterproductive. Many of the men on the receiving end of this new payment system are already facing financial devastation in the form of eviction, foreclosure and aggressive bill collectors. People who owe large amounts of child support are almost exclusively poor and the numbers tell the tale: among those owing $30,000 or more, three-fourths had either no reported income or income of less than $10,000. By allowing states to seize their remaining income stream - federal benefits - these men may very well be left penniless.

Though there may not be much sympathy for the people behind on their child support payments, it’s important not to rush to judgment with overly punitive measures. If you find yourself facing the prospect of divorce, contact an experienced Ohio family law attorney who can help guide you through the difficult process. Count on the expertise of Twinsburg family law attorney Carol L. Gasper.

Source: “Rule could leave poor, delinquent dads with no income,” by The Associated Press, published at USAToday.com.

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