I pay for my children, so why don't I get the tax benefit?

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

Dear Perturbed,

I feel your pain, and sometimes in divorce cases things are just “unfair”, at least on the surface. Let’s look at some of the reasons the judge may not have given you the exemptions and a couple of strategies you might have for getting the exemptions if you can use them.

You probably did not receive the exemptions because the North Carolina Child Support Guidelines give the exemption to the primary residential parent, absent a deviation from the guidelines. The guidelines say “the schedule assumes that the parent who receives child support claims the tax exemptions for the child.” The economist who prepares the guidelines is supposed to take into account the tax benefit of the dependency exemptions, but it is not transparent regarding how the economist does so. Each dependency exemption in 2014 is worth $3950 per qualifying child for federal tax purposes.

Phase-out for the dependency exemptions begins at $152,525 for married filing separate returns, $254,200 for single, and $279,650 for head of household filing status. I do not know how much you make or your filing status, but generally persons who are paying $2000 per month for two children would be making around $140,000 per year, as an approximation. Therefore, the dependency exemptions would not likely be phased out for you. So the good news is that you can use them, if you can get them.

Since the children do not live primarily with you, your ex would have to sign IRS Form 8332 to give you the dependency exemptions. One strategy you might use is the offer her some of the savings you would receive if you had the exemptions to use on your tax return. If you are single and make $140,000 per year, your highest tax rate is 28 percent. So you would roughly save $2000 of federal taxes if you had the two exemptions. Offer her some of your savings. She will have to evaluate her tax situation and whether she is foregoing some other tax benefit, such as earned income credit.

Another strategy is that next time your child support is reviewed, ask for a deviation from the child support guidelines. Put on evidence that the exemptions are being wasted, if the exemptions truly are being wasted. Spend a little more time explaining to the judge thoroughly why you need the exemptions.

Good luck with your tax return and getting Form 8332 from your ex. The IRS is very, very picky about having that form attached to your return if you are not the primary parent.

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This blog is revised from a previous Ask Carolyn in The Rhino Times.

Send your questions on family law and divorce matters to “Ask Carolyn…” at askcarolyn@rhinotimes.com, or P.O. Box 9023, Greensboro, NC 27427. Please do not put identifying information in your questions.

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