I recently came across an article in the New York Post titled “How to Handle the Financial Pitfalls of Divorce”. Naturally, I was intrigued as this is one of the main areas of concern for anyone going through a divorce or thinking about separating from their spouse. As the article summarizes, it is nearly impossible to go through a divorce without financial frustration. Dividing assets is a cumbersome and often lengthy process. One way to potentially ease the pain of the process is by becoming familiar with both your and your spouse’s assets and debts and gathering as much information regarding the assets and debts as you can. Once parties separate, gathering information is one of the biggest and most expensive parts of the divorce process. Beginning the separation or divorce process with as much knowledge of your assets and debts is one way to handle the financial frustration that often accompanies divorce.
During the beginning of each new year, our clients often have questions regarding how their family law case will impact their taxes. One of the issues that parents going through a divorce or child custody case must resolve is which parent will claim the children on their tax return. The dependent exemption can result in big tax savings to the spouse or parent who is able to claim the children on their tax return.
The dependent exemption reduces the party’s taxable income. For the 2016 tax year, the dependent exemption is $4,050 for each child which is a substantial decrease in taxable income, especially if there are multiple children.
The IRS has clearly defined guidelines that answer the question of who will claim the children on their tax return. It is the “custodial parent” who will be able to claim the children on their tax return.
A custodial parent is defined by the IRS as:
“The custodial parent is generally the parent with whom the child lived for the greater number of nights during the year. The noncustodial parent is the other parent. If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income”
During a divorce or child custody case, the custodial parent may release their claim to the dependent exemption. The custodial parent may desire to do this for various reasons. For instance, the custodial parent’s taxable income may be too high and thus the exemption is phased out or the parties may have agreed to alternate the exemption each year. If the custodial parent is releasing their claim to the exemption, then the custodial parent must fill out IRS Form 8332. This form allows the custodial parent to release their claim for one individual year, certain specific years (i.e. even or odd years), or for all future years. The noncustodial parent must attach Form 8332 to their return each year that they are claiming the children on their taxes.
The issue of dependency exemptions in a divorce or child custody case is a complex issue. Family law cases can last over a year before there is a final resolution. Both parents may feel entitled to claim the children while their case is pending but absent a written agreement and a signed Form 8332, the custodial parent as defined by the IRS will be the parent who claims the children on their tax return.
It is best to discuss this issue with both an attorney and an accountant. If you would like to set up a consult with Christophillis & Gallivan, please call our office at (864)233-4445.
We are excited to share our article in Greenville Journal's 2015 Behind the Counter magazine. This year, the magazine focuses on 100 Local Companies. We are honored to be included in this list with some of the most innovative and respected companies in the community. Be sure to pick up your copy today!
For access to the full magazine, please use this link: http://issuu.com/cjdesigns/docs/btc2015_web?e=2014166/12232490
One of the first questions we are asked in our initial consultations is "How much is a divorce going to cost me?" Our answer is and always will be the same...it depends on the specific facts. Each family is different and thus each divorce is different. So much will depend on the grounds for filing for divorce, whether children are involved, and the complexity of dividing the marital assets and debts.
Recently, we read an article written by Susan Caminiti on CNBC's Today show blog that echoed the same messages we often tell our clients.
The more willing the parties are to compromise and fully disclose their information, the less expensive the divorce process can be.
The Today show article lists four major mistakes people make that can create more expensive legal fees, which include:
1) Fighting about minor parenting issues;
2) Not being flexible;
3) Treating your lawyers like a therapist; and
4) Not being financially prepared
At Christophillis & Gallivan, we work closely with our clients to ensure that each client's goals are fully heard and are kept as the focus of the case. Divorce is difficult and there is no easy road when it comes to your most personal issues. However, we expect the best from our clients and implore each and every client to stay focused on the big picture. We walk each client through the issues that commonly arise with divorce, child custody, child support, and division of assets. We firmly believe that the best resolutions are the ones that can be reached by compromise between the two parties
We want our clients to know that there is not a "one-size fits all" approach to the divorce process. At the end of the day, our job is to help you through the divorce process and create a new "normal" that allows you to look towards the future with hope.
Wow....it's hard to believe that 2015 is in full swing already! Our team at Christophillis & Gallivan is working hard to make 2015 our best year yet. In doing so, we are also looking back at 2014 and the milestones we accomplished.
Undoubtedly, our biggest success in 2014 was the addition of our office manager, Barbara Rheney, and our certified paralegal, Stephanie Pauling. Both Stephanie and Barbara have enhanced our firm in countless ways and we are happy to welcome them both on board. One of the cornerstones of our business is our personal approach to each and every client and Barbara and Stephanie are always available to answer client questions.
Additionally, we welcomed our paralegal intern, Katie Tucker, to our firm this year. Katie is currently enrolled in the paralegal program at Greenville Technical College. Katie has been such an asset to our firm and we are thrilled she chose Christophillis & Gallivan for her internship.
We are proud that our firm was able to participate in several community charities and events this year. We cannot emphasize enough the importance of giving back to our Greenville community. Greenville has done so much for our firm, as well as so many other small businesses, and we hope to continue to give back to our amazing community each year.
Looking forward to 2015, our goal is to continue to focus on our core areas of practice: family law, will preparation, criminal law, and personal injury. Our attorneys are committed to providing quality service and attention to each of our clients. Stay tuned.....we are just getting started!