Tag Archive for: child support

Divorce and Your Taxes

A change in marital status means many changes to your tax situation. It’s important to inform the IRS of these changes and review the effects of your different options in order to get the most beneficial tax results.

If you have changed your legal address, the IRS has to be officially informed by filing Form 8822. If you change your name, you need to inform the Social Security Administration, using Form SS-5.

To avoid withholding too much or too little from your paychecks now that your family size and/or family income has changed, ask your HR department for a new W-4 form and make the necessary changes.

Filing Status

There are five tax-filing statuses: single, married filing jointly, married filing separately, head of household, and qualified widow(er) with dependent child. While the last option is not available to you, which of the other options you use depends on multiple variables.

The IRS considers your marital status as of midnight on December 31. If your divorce was finalized on December 30, you cannot file with either of the “married” options. If you don’t get divorced until January 1, you cannot file as “single,” even if you did not live together, because you were still married as of December 31.

If, however, you were separated for more than six months, you were paying the majority of household expenses, and you have at least one dependent, you can file as “head of household.”

Before determining your tax filing status, consider the tax effects of each of your options. While married filing jointly has a higher standard deduction, you are then both liable for whatever taxes are incurred. If your income is significantly lower than your spouse’s, you may be better off filing as married filing separately or as head of household, if that is an option. Remember, however, you cannot file as single if you are still legally married on December 31.

Claiming Dependents

If the divorce decree does not dictate who claims the children, the IRS rules that the parent with whom the children stay for the majority of the year (usually the custodial parent) can claim them as dependents. In the unlikely event that they stay with each parent the exact number of days in a year, the parent with the higher adjusted gross income can claim them.

The parent who claims the children is then eligible for other tax benefits: an increase in Earned Income Credit, possible Child Tax Credit, Child and Dependent Care Credit, and educational or medical deductions.

Alimony and Child Support

Child support is neither tax deductible by the payer nor needs to be reported by the receiver. The thought is that if the parents had not divorced, they would be paying for their children’s food, clothing, and housing, none of which is tax deductible, therefore child support is not tax deductible.

Alimony is handled differently, depending on whether your divorce took place before or after December 31, 2018.


For divorces prior to 12/31/18, the payer is able to deduct alimony from taxable income, and the receiver has to report the alimony as taxable income. For divorces after 12/31/18, the payer may not deduct alimony from taxable income, and the receiver does not report the alimony as taxable income.

This significant change is due to the Tax Cuts and Jobs Act, which went into effect for alimony as of January 1, 2019. Divorces prior to that date are grandfathered into the old tax law unless modifications are made to the divorce agreement.

 

Given the many changes that can take place in the first year or two after divorce, it’s best to work with a tax advisor who is familiar with the tax challenges associated with divorce. A good divorce lawyer should be able to recommend a tax professional who can help you.


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Child Custody Expenses in High Income Cases

The definition of “high income” and the calculation of support varies from state to state. In Pennsylvania, Rule 1910.16-3.1. of the Pennsylvania Code defines high income as the combined net income of both parents in excess of $30,000 per month. The monthly child support formula, which includes a base figure plus a percentage of income, is calculated depending on the number of minor children to be supported. This figure is then divided between the parents according to their income and the number of overnights a child spends in each home.  

A judge has the option to adjust this figure as necessary, based on a number of factors. For instance, if a child has special needs or extraordinary medical bills, the judge will make sure the child’s needs are sufficiently covered, to the extent that the parents are able. Often, children from high-income families attend private school and/or have expensive extra-curricular activities. The judge may further adjust support to maintain the standard of living to which the child is accustomed.

Additionally, if there is a great discrepancy in the income of the parents, the judge will consider the living standards of the lower-income parent. The judge may adjust support in order to maintain a comfortable standard of living for children when staying with either parent. When making these decisions, the best interest of the children is always the goal.

Child support ends when the child turns 18 or graduates from high school, whichever comes later. The paying parent, however, should not depend on the court system to terminate the standing order. If the parent wants to end support, he or she should file a motion to modify child support shortly before the legal ending date, to allow time for the process to take place.

Given that mandatory child support ends at the end of high school (or at 18, whichever is later), it follows that contributing to the cost of college is not required. If this is an important goal, it’s best to come to an agreement, in writing, before child support is calculated by the courts. Once it is in writing, this agreement becomes binding, and the supporting parent is obligated to maintain the support as written. As with any contract, not paying the tuition would be a breach of contract and the spouse can be taken to court, where the judge can order payment.

As with all Pennsylvania child support issues, it is always a good idea for parents to consult an attorney.  We can determine if the guidelines have been followed and if an agreement is fair. Furthermore, we can make sure that all of your paperwork is filed correctly with the court.  

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Special Needs Children and Divorce in PA

Divorce is a complex scenario that confronts many families across the globe every year. The situation becomes significantly more complicated when there is a special needs child involved. Issues of child custody, visitation, and support, and property division all become a little more complicated when the scenario involves a special needs child. There are a handful of things that need to be taken into consideration if you find yourself in this particular situation to ensure you and your child are taken care of.

Some of the first questions to consider are: What are your child’s medical and functional needs? How much will it cost to meet these needs and how are they to be managed? Child support charts do not address the additional cost that one may incur when caring for a child that requires specialty medical care, services, equipment, additional vitamins, enhanced nutrition, etc. One may consider consulting a life care specialist to help address these questions from a professional standpoint.

 

It is not uncommon for the parents of a child with special needs to disagree upon the amount of care or services necessary to meet the needs of the individual child. In this case, it is important that a third party professional is consulted to guide decision-making and offer solutions.

 

It is the objective of the court to determine what is in the best interest of the child. Common factors taken into consideration include:

 

  • With whom will the child be living?

 

  • To what capacity does the parent have the ability to understand and meet the needs of the child?

 

  • How much contact will the non-custodial parent be allowed?

 

  • How stable is the household in which the child will reside?

Each of these considerations become even more prominent when the court is determining the custodial parent.

Typically in the case of divorce, child support ends at the age of majority or when a child graduates from college. However, when dealing with a child with special needs, there is the possibility of lifelong caregiving. It is the parents’ responsibility to remain aware of the child’s eligibility for government or private agency benefits, employment, recreational and socialization opportunities, independent living, and custodial care as they transition into adulthood.  It will be necessary that the divorcing parents work together to keep their child actively engaged so that they may work toward becoming a self-sufficient member of society.

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Can You Pay Child Support Directly To The Child?

Child support is designed to allow the non-custodial parent to share the financial load for food, clothing, shelter, and other expenses of raising a child. Some parents wonder if it would be easier, wiser, or more beneficial to pay child support directly to the child. In almost every case, the answer is…no.

 

Child support is a direct agreement between the parents. There are many expenses that go along with raising a child. So, while payments made directly to a child may allow that child to buy themselves clothes and a little food, it would not allow them to pay rent or a mortgage, utility bills, insurance, medical bills and many of the other financial obligations that a parent handles. In most cases, a child is too immature in both experience and financial knowledge to handle child support money on their own. Therefore, it is better left to the parents.

 

The parent who has primary custody, or has a lower income and has equal custody, is entitled to receive child support.  It is their choice whether to file through the court, in which case the amount will be attached to the payor’s wages, or to have the support paid directly. The benefit of having the court garnish the payor’s wages is that they will keep track of the payments and if any are not paid, they will automatically order a contempt hearing for enforcement after 30 days.  

 

Despite the ease of wage attachment for basic child support, it may be simpler to have expenses that fluctuate such as tuition, camp fees, and before or after school care expenses paid directly to the provider. In those situations, you will be responsible to file for enforcement if the direct expenses are not paid.

Keep in mind that child support is based on a guideline calculation in proportion to incomes and is based on the total income of both parents.  That is why a lower income household may have a lower amount of support than a higher income household.  

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Allocation of Support

Allocation is the identification of separate portions of a support award where a party receives both child support and some form of spousal support simultaneously. Child support and alimony payments have different tax consequences. Child support is not tax deductible by the payor or taxed as income to the payee. The exact opposite is true of alimony. Alimony can be claimed as a tax deduction for the payor and must be claimed as income by the payee. Parties can reach a mutual agreement to allocate a support award however they see fit. Where support is calculated pursuant to the guidelines, the Order will spell out what portion of the support award is child support versus what portion of the support award is alimony.

Child support is payable to the custodial parent until the child is 18 or graduates high school, whichever is later. Child support is subject to modification based on a change in circumstances such as different income for the parents, different expenses for the child or a different custody schedule. Alimony is support paid to an ex-spouse following the divorce decree. The amount of alimony is largely based on the incomes of the parties but may also be affected by the distribution of the other assets, if any. Unless otherwise stated by agreement, alimony may be subsequently modified due the changed circumstances of either party. The changes must be substantial and of a continuing nature. As previously alluded to, an alimony provision within an agreement between the parties may not be modified in the absence of a specific provision allowing such a modification within the agreement.

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Child Support for Military Families

There are several options in providing for child support of minor children when one of the parents is in the military. One option is the traditional method of pursuing court-ordered support through the state court with jurisdiction. Please note that the Servicemember’s Civil Relief Act (SCRA), which mandates a stay on civil matters while a servicemember is on active duty, may interfere with the ability to quickly pursue a court order through a local court. A servicemember can elect to waive the protection provided by the SCRA and proceed with any civil matter, including family law issues, at their discretion. Any such waiver should be writing.

Another option is to reach an agreement on support. Written support agreements can be enforced through the military or the state court with jurisdiction. In a scenario where there is not an order in place for support and there is no agreement, the servicemember’s relevant branch of military can establish an interim support amount based on their regulations. All branches of the military maintain regulations that require a duty of support by the servicemember to their family/dependents. Most branches of the military have established support requirements that are tied to the number of dependents requiring support (spouse and minor children) and their gross pay and/or Basic Allowance for Housing (BAH). This interim support may be less than what is provided pursuant to the child support guidelines in your jurisdiction. For this reason, it should truly only be used as a temporary means of relief with the intent to follow through with a court ordered support award as soon as possible.

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Child Support Awareness Month

August is National Child Support Awareness Month. August has been dedicated to child support awareness since 1995 when President Clinton began it as part of his welfare reform agenda. The purpose of raising awareness is to improve the collection of child support payments. The preferred method of collection is wage garnishment. There is also information on sanctions for failure to pay support which may include suspension of driver’s licenses and passports for parents with child support arrears. All 50 states participate in child support awareness month.

Child support in Pennsylvania is based on statewide guidelines established by the Pennsylvania Supreme Court. The guidelines are intended to ensure that similarly situated parties are treated similarly and are based on the combined net monthly income of both parties as well as the number of children involved. Pennsylvania does use wage garnishment as a means of securing consistent payment. The family court has the authority to issue a bench warrant to have a party who is not making support payments taken into custody. Additionally, the court can order additional incarceration at a subsequent support hearing as a means of reiterating the importance of regular support payments and demonstrating the severity of the punishment available for failure to comply. The court can also seize any lump sum payments due to the payor including unemployment compensation, workers’ compensation, insurance settlements, Social Security retirement or disability benefits, and other public or private retirement funds.

Click here to read more about child support.

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Child Support Awareness Month

August is National Child Support Awareness Month. President Clinton began the month of recognition in 1995 as part of his welfare reform agenda. The goal was to improve the collection of child support payments by widening the use of sanctions including wage garnishment and suspending driver’s licenses and passports for parents with child support arrears. As of today in Pennsylvania, wage garnishment is virtually always utilized to ensure child support payments can be collected. Child support in Pennsylvania is based on statewide guidelines established by the Pennsylvania Supreme Court. The guidelines are intended to ensure that similarly situated parties are treated similarly. Accordingly, all parties making $3000 per month with 3 kids would have the same basic support award based on the guideline amounts. The guidelines are based on an “Income Shares Model,” such that the amount is based on the combined net monthly income of both parties.

The amount of support reflected in the guidelines is based on the average expenditures of children for food, housing, transportation and other necessary miscellaneous items. Pennsylvania has established a self-support reserve based on the federal poverty guidelines, however, the support guidelines make financial support of children a top priority and the child’s needs in terms of support come first. The family court has the authority to issue a bench warrant to have a party who is not making support payments taken into custody. Additionally, the court can order additional incarceration at a subsequent support hearing as a means of reiterating the importance of regular support payments and demonstrating the severity of the punishment available for failure to comply. The court can also seize any lump sum payments due to the payor including, but not limited to, unemployment compensation, workers’ compensation, and Social Security retirement or disability benefits.

Click here to read more about child support.

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Divorced With Children: Issues You Need to Consider

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If you are seeking a divorce and you and your current spouse are parents you need to lay the foundation for a happy and healthy future for yourself and your children. When divorcing there are both emotional and financial issues to consider. Issues surrounding children can be extremely contentious during a divorce, but a skilled attorney can help bring together to start working on issues together for the sake of the children.

If you and the other parent can not agree, a family law judge will make final decisions for you. However, they work from the relevant facts of your case, applicable laws and what they feel is in the best interest of the children. It is best to keep your case out of court and work together for the sake of your children.

When children are involved in a divorce, there are two major areas to be understood and considered:

  1. Custody / Visitation

There is legal custody (which covers who can make important legal, health and educational decisions concerning a child) and physical custody (which concerns with whom the child will live, when and for how long). Normally legal custody is shared by the parents .

During our discussions on physical custody, we will discuss where the child is going to spend his/her time during regular times of the year, vacations and holidays. Physical custody can be join which both parents have equal time or one parent may have primary custody with the other parent having partial custody. In some instances there may be no overnights or supervised custody.

2. Child Support

Parents have a legal obligation to financially support their children but must file to receive it. How that is calculated is based on state guidelines. Generally the parent who does not have primary physical custody provides child support payments to the other parent and/or agrees to pay certain bills or expenses concerning the child.

It is important to create an environment dedicated to supporting your children so they remain stable long after the divorce is over.

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Additional Expenses in Child Support

Child support in Pennsylvania is based on statewide guidelines established by the Pennsylvania Supreme Court. The guidelines are intended to ensure that similarly situated parties are treated similarly. Accordingly, all parties making $3000 per month with 3 kids would pay the same amount of support based on the guideline amounts. The guidelines are based on an “Income Shares Model.” Accordingly, the guideline amount will be based on the combined net monthly income of both parties. However, there are circumstances which warrant a deviation from the guideline amount such as having a special needs child.

There are often additional financial, education, and medical costs associated with raising a special needs child. The child may be involved in counseling and/or specialized education. There may be frequent medical attention required. Sometimes, special supplies are needed to encourage good behavior and/or supplement their educational program. The Rules of Civil Procedure governing support matters do allow for deviations from the guideline amount. Rule 1910.16-5 lists the factors to be considered in deciding whether a deviation is appropriate. Reasons for any deviation must be clearly articulated. Rule 1910.16-6 discusses allocation for additional expenses independent of the basic support award. Additional expenses can be added in such as health insurance costs, child care costs, summer camp, private school tuition, unreimbursed medical expenses, and other needs. You can create a support order which would dictate these expenses be split between the parties in proportion to their income. Parties can agree to pay the provider directly for their share or for one party to pay the full sum and then seek reimbursement from the other party. It is always a good idea to keep detailed records of expenses for the children and provide proof of the costs.

Click here to read more about child support.

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