In two recent cases, the Tax Court ruled on the validity of a dependency exemption release to a noncustodial parent. Taken together, the cases illustrate how a properly executed and filed Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, is the key to releasing a claim of exemption and outweighs state court orders.
In Armstrong, the court denied the deduction and child tax credit to a noncustodial father who did not attach Form 8332 to his 2007 tax return. The taxpayer, Billy Armstrong, did attach a copy of an “arbitration award” indicating he would be entitled to the dependency exemption for one of his and his ex-wife’s two children if he stayed current with child support. Upon audit, he also provided a 2003 state court order that incorporated the arbitration award and a 2007 state court order signed by the ex-wife that explicitly required the ex-wife to provide him with an executed Form 8332 or its equivalent if his support payments were current, which they were. The IRS rejected his claim because the award and orders were conditioned upon current payment of child support. The majority opinion of the Tax Court agreed that the state court orders did not unconditionally declare that Armstrong’s ex-wife would not claim the exemption and therefore could not substitute for Form 8332.
Written by Karyn Bybee Friske and Darlene Pulliam. To read the full article, click here. For more information on family law attorneys, visit our website http://www.jwbrookslaw.com
The traditional view of child support is that parents share in support of children. Child support guidelines take into account monthly obligations of custodial parents and payments made by non-custodial parents to custodial parents’ households. Upon remarriage, this traditional view maintains that the new spouse’s income is not included in child support calculations, though there are some exceptions.
Some states, such as California, take into account a new spouse’s income when making child support payment determinations only in extraordinary cases. Extraordinary cases are defined as unemployment, underemployment, income reduction, and/or other reliance upon a new spouse’s income. In extraordinary instances, it must be proved that children would suffer extreme hardship without imputing income of the new spouse.
The reason for this exclusion is that the new spouse has no legal obligation for the financial support of stepchildren. It is true that the new spouse’s income assists the household and may help meet needs of children on a voluntary basis. But there is no legal duty for this income to be imputed into support calculations.
Some states have evolved from this traditional view. The result is a complication of child support calculations upon remarriage of either parent.
In Illinois, courts may now consider income of a parent’s new spouse on an equitable basis when determining child support. In Illinois and similarly-minded states, courts are no longer required to ignore financial resources contributed by a new spouse. Instead, Illinois courts are free to give consideration to whether new children are brought into the household through remarriage, the ability of one to support himself, and contributions for health insurance, health expenses, daycare, and other discretionary factors.
Another factor potentially affecting child support payments as a result of remarriage by the non-custodial parent is the addition of children to the non-custodial parent’s household. The requirement to make child support payments does not disappear, but monthly payments may decrease with more children to support.
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