Taxes and Child Support and Dependent Exemptions
Given the recent upheaval in changing the Federal Tax Code, I have deleted my previous notes on tax during divorce. For now, I direct you to www.irs.gov for information available to the public on Federal taxes. The basic online starting point for getting yourself informed about such federal tax issues is publication 504 found at www.irs.gov.
Colorado courts order the allocation of the dependency exemptions as part of their child support process. Colorado law on this is clear, if not precisely helpful:
Unless otherwise agreed upon by the parties, the court shall allocate the right to claim dependent children for income tax purposes between the parties. These rights shall be allocated between the parties in proportion to their contributions to the costs of raising the children. CRS 14-10-115(12).
If you don’t agree to do anything different, a judge may order exactly that: a division in proportion to the costs of raising the child. The problem is that only one taxpayer may claim a dependency exemption or child tax credit for a child for a tax year. This tax benefit cannot be split between two or more taxpayers. So it is not a precisely helpful law, because it is hard to get the right 45% of the time, and you can’t get 45% of a tax right in a single year, even if that is the proportion you contribute to raising the child.
This law is a poster child for the benefits of negotiation and mediation. Think about the “unless otherwise agreed upon by the parties” part of the statue. Perhaps you can negotiate some other accommodation.
Colorado courts order the allocation of the dependency exemptions as part of their child support process. Colorado law on this is clear, if not precisely helpful:
Unless otherwise agreed upon by the parties, the court shall allocate the right to claim dependent children for income tax purposes between the parties. These rights shall be allocated between the parties in proportion to their contributions to the costs of raising the children. CRS 14-10-115(12).
If you don’t agree to do anything different, a judge may order exactly that: a division in proportion to the costs of raising the child. The problem is that only one taxpayer may claim a dependency exemption or child tax credit for a child for a tax year. This tax benefit cannot be split between two or more taxpayers. So it is not a precisely helpful law, because it is hard to get the right 45% of the time, and you can’t get 45% of a tax right in a single year, even if that is the proportion you contribute to raising the child.
This law is a poster child for the benefits of negotiation and mediation. Think about the “unless otherwise agreed upon by the parties” part of the statue. Perhaps you can negotiate some other accommodation.