From the Lawyers' Desk: Claiming the Kids

By Alisse C. Camazine of Paule, Camazine & Blumenthal, P.C.

When you and your ex-spouse were together, you filed your taxes jointly.  Maybe you were involved in the process or maybe not, but either way taxes can get very complicated.  Exemptions, deductions, and credits are enough to make your head spin.  Now after the divorce, you may be filing your taxes as a single individual for the first time in a very long time.  Likely, it's your first time filing solo when your children are involved.

The government provides various tax deductions and credits related to your children.  Credits have more restrictions placed on them and those restrictions are usually income related: the higher your income, the lower your credit.  If you qualify, you may receive a child-tax credit in the amount of about $1000--so for every child you have, you receive $1000 off your tax bill.

 A deduction has fewer restrictions but instead of subtracting from your overall tax bill, a deduction lessens your taxable income.  When you file, every dependent in of your household likely counts toward a tax-deductible exemption.  This past year, the exemption was a few thousand dollars a person-- so a family of four would probably receive over $10,000 in deductions.

But what happens when the parents in that family of four separate? Only one person gets to claim the children as dependents on their tax return so who is it?

The Form 14 is used by Missouri courts to calculate child support amounts.  The Form 14 assumes that the parent entitled to receive child support claims the tax exemption for those children.  For a long time, courts have not deviated from that assumption.  Recently, however, the Missouri Court of Appeals decided that it would not be improper for the parent paying child support to claim one or more children on their tax returns. 

In this case, there was a mother, father, and four dependent children.  Mother was receiving child support so she claimed her four children on her tax returns.  The Court examined the Tax Code and decided that mother would receive the same tax treatment whether she claimed all four of her children, or just three. 

The Court considered that father, who received no dependency deduction, was shouldering an unnecessarily increased tax liability.  That liability reduced the overall funds available to the family unit and did not benefit Mother or the children; thus providing Mother with all the deductions was not in the best interests of the children.   

The takeaway from this case is that while the person receiving child support can usually claim the children as dependents on their taxes, this is not a hard and fast rule.  The court has discretion to act in the best interests of the family unit, even if this means providing the tax exemption to the parent paying support. 

Since the Form 14 assumption that the parent receiving support also receives the tax exemption is no longer a hard and fast rule, it is important to decide who gets to "claim the kids" in advance, to put it in writing, and to do so well in advance of April 15th.  The parties should consider this in any divorce case.

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