The financial impact of a divorce is often one of the longest-lasting challenges that families will face. Divorces can be expensive, even without the changes in household income and bills. This is especially true for divorced couples with children. The way divorced parents approach filing their taxes each year is another financial consideration they must keep in mind. Continue reading →
The American Rescue Plan Act of 2021 (hereinafter “Plan”), also called the COVID-19 Stimulus Package, was passed by Congress and officially signed into law by President Joe Biden on March 11, 2021. The Plan seeks to aid the economy in recovering from the effects of the COVID-19 pandemic. One significant change the Plan provides for is a new federal enhanced child tax credit beginning July 15, 2021. Statistics show that the credit will go to roughly 39 million households with about 65 million children. For the 2021 tax year, the enhanced maximum child tax credit is $3,600 for children younger than age six (6) and $3,000 for children between the ages of six (6) and seventeen (17).
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?
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
Forget it!
Forget about the alimony deduction for all new decrees or instruments post-2019. (See Part I for modification of pre-2019 alimony orders and agreement, as modification has a separate set of rules.) The deduction is gone absent a congressional miracle. That means on December 31, 2018, or before you must have alimony that qualifies under IRC Section 71 before it is repealed. The alimony must meet the terms of Section 71, pre-TCJA and pre-2019, which are as follows: Continue reading →
Previously, we examined the paragraph and subparagraphs defining “divorce or separation instruments.” Now let’s take a look at which sections of TCJA incorporate these subparagraphs.
The repeal of the alimony tax sections for the inclusion of income and deduction has an ancillary impact on other divorce tax issues. The effective date for all ancillary issues discussed in this article is December 31, 2018, the same as the alimony repeal. These December 31, 2018, changes shall be referred to herein as “post-2018” changes. Continue reading →
Divorce was hard enough, and now alimony tax reform. Do you feel good or bad about alimony? No matter your answer, this alimony tax reform revolutionizes the divorce arena, and you need to know how it may affect you and your clients. Judges need to know how it might affect those whose appear before them as litigants. So let’s dig in. Continue reading →
Facts: A husband and wife filed joint returns. The returns were prepared by the wife. The returns understated the amount of tax due, mostly because they wrongly double-counted certain gambling losses incurred by the husband.
The IRS assessed a deficiency. The wife filed a petition for innocent spouse relief, the IRS denied it, and the wife appealed to the Tax Court. Continue reading →
Stapleton v. Comm’r, T.C. Memo. 2015-171, 2015 WL 5049758
Facts: A father and mother had two children. The parents were never married. No court was ever asked to decide custody, but the parents agreed that the father would have the children every Monday and Wednesday night and every other weekend. In 2011, the father had custody of the children for 176 days. Continue reading →
North Carolina Divorce Lawyers Blog