Filtering by Category: guidelines

Tax Exemptions & Tax Issues Related to Children - Indiana Child Support 2015

February 10, 2015 /

The post discusses how the Indiana Child Support Guidelines deal with which parent gets the right to claim children as dependents and receive the corresponding exemption, as well as other tax credits and deductions. Keep in mind that the parents can agree how to share the right(s) to claim. Before we get to the discussion, there are some important tax forms and publications for parents of children to consider.

RULES AND FORMS

I highly recommend reviewing the IRS Publication 501, which provides important details and tax rules related to children.
See IRS Publication 503, which provides the tax rules related to claiming your child's day care or other work-related child care expenses.
Here is a link to the Form 8332, which is the form that must be completed if you need to transfer the right to claim a child or children to the other parent.
The last IRS link is to Publication 970, which describes the tax benefits you may be eligible to claim for education related costs and events. Don't skip this one, because you may be eligible for tax credits (read: cash) for education costs you paid for yourself or a dependent.

How the Guidelines deal with the right to claim....

The Indiana Child Support Guidelines include the following language regarding the right to claim their child(ren) as dependents for tax purposes:

Tax Exemptions. Development of these Guidelines did not take into consideration the awarding of the income tax exemption. Instead, it is recommended that each case be reviewed on an individual basis and that a decision be made in the context of each case. Judges and practitioners should be aware that under current law the court cannot award an exemption to a parent, but the court may order a parent to release or sign over the exemption for one or more of the children to the other parent pursuant to Internal Revenue Code § 152(e). To effect this release, the parent releasing the exemption must sign and deliver to the other parent I.R.S. Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents. The parent claiming the exemption must then file this form with his or her tax return. The release may be made, pursuant to the Internal Revenue Code, annually, for a specified number of years or permanently. Judges may wish to consider ordering the release to be executed on an annual basis, contingent upon support being current at the end of the calendar year for which the exemption is ordered as an additional incentive to keep support payments current. It may also be helpful to specify a date by which the release is to be delivered to the other parent each year. Shifting the exemption for minor children does not alter the filing status of either parent.

The noncustodial parent must demonstrate the tax consequences to each parent as a result of releasing the exemption and how the release would benefit the child(ren). In determining when to order a release of exemptions, it is recommended that at minimum the following factors be considered:

(1) the value of the exemption at the marginal tax rate of each parent;

(2) the income of each parent;

(3) the age of the child(ren) and how long the exemption will be available;

(4) the percentage of the cost of supporting the child(ren) borne by each parent;

(5) the financial aid benefit for post-secondary education for the child(ren); and

(6) the financial burden assumed by each parent under the property settlement in the case.

In sum, the Guidelines suggest that judge should consider how shifting the right will make the most money available for the child(ren).

There are other issues to consider as well. For example, at some income levels the value of the right to claim "phases-out" so the right to claim is not worth as much to that parent. Also, there are other tax deductions and/or credits that follow the the parent who has the right to claim. Consider having an accountant or other tax professional testify regarding the overall tax effect if the amounts are significant.

Effective July 1, 2011, the court must specify in a child support order which parent of a child may claim the child as a dependent for purposes of federal and state taxes. This law also clarified that a court must specify that the noncustodial parent of a child may claim the child as a dependent and order the custodial parent of the child to take all actions necessary to release the custodial parent’s claim to the exemption in the manner required under federal law. Finally, the law also requires a court to include in a court order that a parent who is ordered to pay child support may only claim the child as a dependent if the parent has paid at least 95% of the parent’s child support for the calendar year for which the parent is ordered to claim the child as a dependent by January 31 of the following year.

To discuss this please contact me. To see all of my postings on this topic search here.

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categories / child support, day care, divorce, guidelines, taxes

Balanced School Calendar and Parenting Time - Indiana Parenting Time Guidelines

September 24, 2012 /

The Indiana Parenting Time Guidelines provide a schedule for school breaks and holiday breaks. It is obvious that the schedule provided by the Guidelines did not have balanced school calendars in mind. For instance, the Guidelines contemplate that Spring Break will be only one week, whereas in a balanced calendar Spring Break is two weeks long. Balanced calendars are becoming increasing popular and are being adopted by many Indiana school corporations. However, the new Guidelines, effective March 1, 2013, discuss balanced calendars.

What is a balanced school calendar?

The following charts compare the distribution of days in school and days on break on the nine-month traditional calendar vs. the distribution of school days on a balanced or modified calendar. Weekends are excluded form the charts, with both models detailing a typical year of 258 work days (Monday through Friday). Both charts represent a standard school year of 180 days.

The traditional calendar features a long summer vacation of 12 weeks followed by a long period of in-session days, with the first break coming at Thanksgiving. The winter holidays are followed by 55 in-session days before a short spring break. Spring break is followed by 40 work days before the end of the school year.

The balanced calendar reduces the long summer break and simply apportions those days throughout the school year, producing more frequent breaks and thus limiting long periods of in-session days, as well as longer vacations. Both calendars feature 180 days of instruction, with the modified calendar balancing the frequency of in-session days with days on break. The winter holiday and Thanksgiving break can be the same on both calendars.*

Not all schools follow the above calendars exactly, but generally, the idea is a shortened Summer break and longer Fall and Spring Breaks.

The most significant change is a shorter Summer Break. This affects all parents, in that the Guidelines presently presume each parent receives one-half of the Summer Break. Moreover, parents who exercise the suggested schedule "Where Distance Is A Major Factor" receive seven (7) weeks of the Summer Break. With a balanced calendar there may not be seven (7) weeks of Summer Break altogether. Presumably this time could be made up during the Fall and Spring Break, but doing so will require additional travel time and travel costs.

The Guidelines presently only assume one week of Spring Break and do not provide for Fall Break whatsoever. The Amended Indiana Parenting Time Guidelines do provide for Fall Break, and define both Spring Break and Fall Break in a manner which could be longer than a week. The amended language is as follows:

Spring Break. From two hours after the child is released from school on the child’s last day of school before Spring Break, and ending 7:00 p.m. on the last day before school begins again.

Fall Break. From two hours after the child is released from school on the child’s last day of school before Fall Break and ending 7:00 p.m. of the last day before school begins again.

The new Guidelines, suggest that if a child attends a school that has a year-round or balanced calendar, the noncustodial parent's extended parenting time shall be one-half of the time for fall and spring school breaks. Unless agreed otherwise, the noncustodial parent shall have the first half in off years, and the second half in even years. Additionally, the new guidelines state:

If the child attends a school with a year-round or balanced calendar, the noncustodial parent's parenting time should be adjusted so that the noncustodial parent and child spend at least as much time together as they would under a traditional school calendar.

The best way to deal with the impact of a balanced calendar on your child and your parenting time would be to customize your parenting time plan to deal with the calendar. Doing so will likely require formal modification of the parenting time order with the Court that has jurisdiction of your case.

To discuss this further please contact me. To check your school calendar, go to my Indiana Schools page here.

* The charts and explanations above are used with permission of the National Association of Year Round Education ("NAYRE"). NAYRE is a nationally recognized organization of educators, parents and businesses working to increase student achievement through its focus on creating effective time on learning. The Association promotes a balanced academic calendar to reduce learning loss and extensive review time that decreases time for new learning.

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categories / school, guidelines, parenting time, calendar, custody

New Indiana Parenting Time Guidelines 2012 - Equal Parenting Time and Parenting Coordination Provisions

September 16, 2011 /

This post is an update of previous posts (here and here and here) which have followed the Domestic Relations Committee as it reviews and revises the Indiana Parenting Time Guidelines. Since the last post the Domestic Relations Committee has published summaries of their meetings occurring in February, March, May and July of 2011. If this topic is of interest to you, I encourage you to read the minutes yourself. There are two items in these minutes that seem important to address in this post.

First, there appears to be a consideration to presume more parenting time for noncustodial parents, and a provision regarding equal parenting time. The minutes do not reveal the details of how the presumption of minimum parenting time would change, or whether the Guidelines will discuss situations where equal parenting time might be presumed, but if these topics are handled in the revised guidelines it would be a major change. This was a hotly argued concern at the public hearing regarding the revisions. I get more comments on my blog regarding the these two issues than any other topic.

Secondly, the minutes reflect that parenting coordination is a concept that will be addressed in the revised guidelines. The committee agreed to draft three rules related to parenting coordination as follows: (1) adopt the parenting time guidelines including provisions about parenting coordination, (2) give parenting coordinators immunity, and (3) require parenting coordinators to meet educational requirements and pay a registration fee. Also, it is worth noting that while the May minutes reflect that the committee supported not allowing a judge to order a parenting coordinator over objection of the parents, the July minutes reflect that the parenting coordination rules will allow a court to order parenting coordination over a parties’ objection. This position is consistent with a recent Court of Appeals case. This is an important issue because disagreement between the parties is one of the main reasons a parenting coordinator is necessary.

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categories / guidelines, noncustodial, parenting coordination, parenting time

All Things Family Law

Filtering by Category: guidelines

Tax Exemptions & Tax Issues Related to Children - Indiana Child Support 2015

Balanced School Calendar and Parenting Time - Indiana Parenting Time Guidelines

New Indiana Parenting Time Guidelines 2012 - Equal Parenting Time and Parenting Coordination Provisions