Articles Tagged with Child support

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Carolyn Woodruff, J.D., C.P.A, C.V.A.

Dear Carolyn:

My ex and I share the children fifty-fifty.  We have three children.  I make approximately $25,000 more than the other parent.  I pay child support even though I have them half the time.  Our child support order says nothing about who gets the dependency exemptions, and I get in a fight with my ex every year over the dependency exemptions.  Who should get the three dependency exemptions?

Carolyn Answers….

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Dear Carolyn,

It is tax time.  I am divorced and have two children.  I pay $2000 per month in child support, and my ex (the mother) doesn’t even work.  She will not give me the dependency exemptions for the children.  The judge didn’t give them to me either.  They live with her and I visit every other weekend and half the holidays.  I am paying for the children, so why can’t I have the tax benefit?

Perturbed

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Dear Carolyn,

Prom is coming up, and my daughter is a senior.  I want her to have a nice dress for prom, but her father will not help pay for the dress.  I receive $622 per month child support pursuant to a child support order, and our daughter lives mostly with me.  Can I make him pay for at least part of the prom dress?  What can I do?  These dresses are expensive.

Prom Dress Poor

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Jennifer A. Crissman, Attorney

Timing, as they say, is everything, and if you are appealing an Order in North Carolina, this is particularly true. Slaughter v. Slaughter, No. COA16-1153 was decided by the North Carolina Court of Appeals on July 18, 2017. While there were multiple issues on appeal, the issue that sticks out is the timing and issues allowed on cross-appeal.

Cross-appeals are not a rarity. However, the Court had an issue of first impression on whether a cross-appeal should have been dismissed by the trial court. In Slaughter v. Slaughter, the trial court entered an Order Equitable Distribution on March 31, 2016, and Orders on Child Support, and Alimony on April 1, 2016. The husband filed a Notice of Appeal from the Alimony and Equitable Distribution Orders on April 25, 2016, within the thirty-day window for filing.

Wife filed a Notice of cross-appeal on May 3, 2016, from the Child Support Order and the Equitable Distribution Order. While Wife was within the ten-day window for filing a cross-appeal, Husband filed a Motion to Dismiss her cross-appeal regarding the Child Support Order. Husband argued that the ten-day window for filing a cross-appeal under NC Rule of Appellate Procedure 3(c) should not apply as Husband did not appeal the child support order. Husband’s Motion to Dismiss was denied by the trial court, which Husband appealed.

Husband’s argument on Appeal is that firstly, Wife was outside of the thirty-day window to appeal the Child Custody Order, and secondly, that since Husband had not appealed from the child custody order in his timely appeal, Wife should not be allowed to cross-appeal the Child Support Order. It was a matter of first impression if a Notice of Appeal is limited to only the Order specifically designated in the Notice, where a single proceeding has resulted in multiple Orders. It was also a matter of first impression if a cross-appeal is similarly limited to only the Order specified in the original Notice.

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At the heart of many family law related disputes lie arguably the most difficult decisions regarding the children and their futures.  At times it may seem unlikely that individuals in the midst of a divorce will ever agree on anything; fortunately, ensuring that any children involved receive a quality education is usually a top priority for everyone.  Setting aside differences for what is in the children’s best interest saves not only time but may also preserve important financial resources that may be reallocated to ensuring the children’s futures are preserved. “Agreements” as they are so appropriately called, may avoid costly litigation procedures, and provide the parents with the opportunity to freely discuss, negotiate, and formulate what they mutually believe to be a plan that will best serve the interests of their children.

The freedom to contract is an important legal principle and when utilized correctly, can be both an effective and efficient means of resolving issues. A recent North Carolina Court of Appeals case, New v. New, discusses the implications and consequences where parents utilize this right to resolve how to care for their child as they confront arguably the biggest step of any child’s life: attending college. In New, the parties agreed to pay off their children’s “ordinary and necessary” college expenses. When it came time to pay up, “ordinary and necessary” became a point of contention.  Language in any agreement is crucial, and given the general stance that parties are free to negotiate how they see fit, it is imperative that any ambiguities are either understood and accepted or limited and clarified during formation.  Here, the parties initially worked together, saving time and money in coming to an agreement, only to end up right back in a courtroom, litigating a language based issue that could have been potentially resolved at negotiations.

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Dear Carolyn,

My daughter just graduated from high school, and she is college bound.  Her father and I divorced three years ago.  Her father paid child support, but I understand child support is ending now as she is already 18.  I thought her father would surely pay (or at least help) with college, and he told me last night that he was not helping with college.  What can I do?  Our divorce agreement says NOTHING about college.

~ College Help Needed

 

Dear College Help Needed,

This is a most difficult situation for you and for your daughter.  Unfortunately, in this State, parents have no legal obligation for support after the child is 18 and out of high school.  Other States are different.  For example, in Alabama, the divorce court can order college if the child’s lifestyle and economic status would indicate that the parent would have paid for college in an intact family.  Also, in Massachusetts, as another example, child support continues to age 21.

The only way a parent can be bound to pay for college is in a private agreement.  At the time of your divorce settlement, the father and you could have entered into a private agreement, signed and notarized, that describes how the child’s college costs will be handled.  If you had such an agreement, the agreement would be enforceable by you.  Frequently, college is difficult to negotiate because Father’s feel that the child will “snub her nose” at the father if college is guaranteed by a contract.  You do not say anything about the daughter’s relationship with the father, and whether it is a close, loving relationship.

If the child’s financial aid application requires the father’s income, sometimes it is helpful to have a letter to accompany the financial aid application stating that the father will not participate in college expenses.  I have written several letters like this in the past for clients who have no expectation from a parent of college participation.

Good luck with college for your daughter, and congratulations on her high school graduation. Continue reading →

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Dear Carolyn,

I am thinking about separating from my wife of 10 years. She is a doctor and makes a lot more money than me. I am a school teacher and make extra money coaching, but she still makes a lot more than me.  Neither of us are having an affair, but I am pretty miserable. We are both thirty-three.  She works all the time and I take care of our two children.  I also worked for two years while she finished her medical degree.  I hate to ask, could I get alimony as a man?  Our lifestyle has been great, and I would like to maintain that lifestyle as best I can. Thanks Carolyn.

 

Carolyn Answers:

Very interesting question, but the answer is quite simple. Men can get alimony on equal footing with women, at least theoretically. This issue was resolved by the United States Supreme Court in 1979 in the noteworthy case of William Orr v. Lillian Orr.  In Orr, the Supreme Court held that an Alabama statute that made alimony only available to women was unconstitutional under the Fourteenth Amendment of the United States Constitution, which provides for equal protection. An interesting twist to the Orr situation was that Mr. Orr did not want alimony from Ms. Orr; rather Mr. Orr was upset that women never had to pay alimony under the Alabama statute. Mr. Orr’s argument that the statute discriminated against men won.

Some men do get alimony in North Carolina, but there are vastly more reported cases of women receiving alimony. Times are changing. I personally believe toward more men receiving alimony. The thirties age group has a fairly typical scenario in divorce of both spouses working, or at least no one has been out of the workforce for 20 years.  Neither of you are out of the work force.  Contrast this with divorces of persons in their late forties or fifties where one spouse did drop out of the public labor force to raise children—those dependent spouses who haven’t worked publicly for 20 years generally receive alimony if the supporting spouse has the ability to pay. Continue reading →

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Anderson v. Comm’r, T.C. Memo. 2016-47, 2016 WL 976816 (2016)

Facts: An Alabama court entered a pretrial order in a divorce case, requiring both parties to “[m]aintain status quo as to payment of house note or rent, utilities, food, necessities, fixed credit obligations, ” 2016 WL 976816, at *1. After the order was entered, the husband transferred at least $1,000 each month to the wife “for her spending money and other things that I had previously paid for.” Id.

The husband took an alimony deduction for the amounts paid. When the IRS did not allow the deduction, the husband then appealed to the Tax Court.

Issue: Were the payments alimony for federal tax purposes?

Answer to Issue: Summary of Rationale: The first requirement in the federal definition of alimony states that it must be received under a “divorce or separation ” I.R.C. § 71(b)(1)(A). A “divorce or separation instrument” includes “a decree of divorce or separate maintenance or a written instrument incident to such a decree.” Id. § 71(b)(2)(A). A pretrial order is not a divorce decree, but it is a written instrument incident to such a decree. Thus, the premarital order was a divorce or separation instrument.

The pretrial order directed the husband to maintain the status quo. The husband testified that the payments were intended to cover things he had previously paid for. He was therefore maintaining the status quo, as required by the order, so that the payments were received under a court order. There is no requirement that the divorce or separation instrument list the specific exact amount of support required.

The pretrial order did not specify whether the payments stopped upon death. But the payments occurred periodically, so they were periodic alimony, and Alabama case law stated clearly that periodic alimony ceases upon the death of the payee. Because the payments stopped upon death, they were alimony for purposes of federal tax law.

Lesson: Temporary support, alimony pendente lite, or postseparation support can all constitute alimony under federal tax law, so long as it is clear from the language of the agreement or the order, or from state law if the order is silent, that the obligation terminates upon death of the payee.

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By: Dana M. Horlick, Attorney, Woodruff Family Law Group

 

McBride v. Comm’r, T.C. Memo. 2015-6, 2015 WL 393011 (2015)

(a) Facts: The taxpayer, his grown son and daughter, and his daughter’s child all lived in the same household. On her federal tax return, the daughter claimed an exemption for her child. On his federal tax return, the taxpayer claimed dependency exemptions for the son, the daughter, and her child. The IRS disallowed all three of the taxpayer’s exemption, and assessed a deficiency.

(b) Issue: Was the taxpayer entitled to a dependency exemption for his son, daughter, and granddaughter?

(c) Answer to Issue: No for all.

(d) Summary of Rationale: The dependency exemption is available only for children less than 19, or under the age of 24 and a student. In addition, the person claiming the exemption must provide more than half of the dependent’s support. The taxpayer did not prove that the son and daughter were under age 24, and did not prove that he provided more than half their support. The dependency exemption was therefore properly denied.

When multiple persons meet the requirements for treating a child as a dependent, and only one is a parent, the parent gets the exemption. I.R.C. § 152(c)(4). The exemption for the daughter’s child therefore belonged to the daughter, not the taxpayer.

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Watch out for those hurried, last minute North Carolina agreements that link alimony and child support termination; you could get an unintended tax consequence and the loss of the tax deduction.

While the Johnson case, discussed herein, is not a North Carolina case, it could be.  Guys and gals, you simply cannot link alimony reductions to a child-related event.  It doesn’t work; that is, if you want the deduction.

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