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.
In South Carolina, the best interest of the child is the controlling factor in child custody determinations. Our family courts are routinely working with families in an effort to create child custody and visitation schedules that benefit both the parents and the child. Child custody should not be granted to reward or punish parents, but the fitness/unfitness of a parent or a parent’s ability to care for a child certainly play a role.
Typically, adultery does not have an impact on child custody determinations in South Carolina (other than in circumstances where the adultery directly effects the children).
Other fault-based grounds for divorce (i.e. Physical Cruelty, Habitual Drunkenness or Drug Abuse, and Desertion), however, can definitely impact a child custody determination. These fault-based factors often speak to characteristics of a parent that could be detrimental to a child’s welbeing. Sometimes, a parent exhibiting behaviors that would put a child at risk may be given an opportunity for rehabilitation in order to have a chance to regain custody or visitation rights. Courts can also place restraining orders on parental conduct to limit parent behavior and protect the best interest of the child. A parent who has previously been denied custody rights or has had their custody or visitation rights limited, may petition the court for a modification of child custody if there has been a substantial change in circumstances.
Judge Brown's Standard Visitation Schedule is a child custody and visitation schedule that is commonly used in Greenville, South Carolina and surrounding areas. All family law attorneys in the Upstate should be familiar with Judge Brown's Standard Visitation Schedule as most attorneys use this as a basis to begin a discussion with their clients about child custody and visitation. At Christophillis & Gallivan, we like to work with our clients to customize visitation schedules to fit each family's specific needs. We will walk you through the advantages and disadvantages of using Judge Brown's Standard Visitation Schedule and restraining orders to see if this schedule is the right fit for your family.