Who can claim the kids?

What is the name of your state?What is the name of your state? PA. I agreed to allow my ex to claim child support as alimony. I , in turn, pay the taxes. Three children under 16 live with me 70% during the school year and 50% in the summer months. My ex has claimed the children and "Head of Household" for the last 2 yrs. It is not in our agreement.....I assumed if I let him write off the child support, I could claim the deduction. I receive $78,000 (1/2 alimony, 1/2 child support) He earns $250,000 a year (or more).

JHinPA said:

What is the name of your state?What is the name of your state? PA. I agreed to allow my ex to claim child support as alimony. I , in turn, pay the taxes. Three children under 16 live with me 70% during the school year and 50% in the summer months. My ex has claimed the children and "Head of Household" for the last 2 yrs. It is not in our agreement.....I assumed if I let him write off the child support, I could claim the deduction. I receive $78,000 (1/2 alimony, 1/2 child support) He earns $250,000 a year (or more).

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Unless the entire 78,000 is written into court orders as alimony, then he is committing tax fraud and you are an accessory to his fraud.

He is also not entitled to claim head of household (because the children do not reside with him 51% or more of the time) therefore that is also fraud.

He is not paying taxes (fraudulently) on almost 40,000 (with the child support and the head of household status) of income. He would be in the 35% tax bracket which means he is cheating the IRS out of about 14,000 a year. That is enough for HUGE penalties to be imposed once he gets caught. Unless he is going to continue to pay you 78,000 a year after the children are emancipated...he WILL get caught. Even allowing for the fact that you are paying taxes on money that you shouldn't have to pay taxes on...your bracket is much lower than his so the government is STILL being cheated out of significant funds, and you can be in trouble as an accessory.

Even if its written into your orders that way...if it cuts in half down the road the IRS will STILL catch on and penalize him.

Since your court orders are silent on the subject of the tax exemption, then you are the person technically entitled to the exemption. The regs are very clear on that. Plus, since you are paying taxes on the 78,000 he provides you...he isn't even paying child support for tax purposes....therefore he couldn't even attempt to prove to the IRS that he is providing the bulk of the children's support.

What's more, with his income level, even after the 78,000 to you is excluded, the exemptions are worth almost nothing to him, because they are mostly phased out. So its actually rather ridiculous that he is taking the exemptions at all. The exemptions to you, on the other hand (if 78,000 is your entire income) would be quite valuable.

Yes, it is in my agreement that I will take the child support as alimony. There is no specification for deductions or head of household, though.
I contacted his accountants and they told me he told them that he has the children more than 50% of the time. So, I am not an accomplice to anything.
He is just used to getting away with things.......
Thanks for the response.

JHinPA said:

Yes, it is in my agreement that I will take the child support as alimony.
I contacted his accountants and they told me he told them that he has the children more than 50% of the time. So, I am not an accomplice to anything.
He is just used to getting away with things.......
Thanks for the response.

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Well, from now on you claim the children, even if you have to file a paper return because he filed first electronically and claimed them.

You can even amend your tax returns for 2002, 2003, and 2004 if you care to do so. The IRS will then make him pay back the reduced tax amount that he recieved due to the exemptions. It won't be much for him to pay. As I said, the exemptions are actually worth very little to him at his income level because they phase out.

JHinPA said:

Yes, it is in my agreement that I will take the child support as alimony. There is no specification for deductions or head of household, though.
I contacted his accountants and they told me he told them that he has the children more than 50% of the time. So, I am not an accomplice to anything.
He is just used to getting away with things.......
Thanks for the response.

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Wait a sec, in your first post - you said the kids are with you 70% during school and 50 % during the summer, so how in the whole year does the ex have the kids more than 51% of the time?????????? That is SO NOT the case.

And, you ARE an accomplice, because CS is NOT tax deductible and you're allowing your EX to LIE and say it was alimony, not CS. Because Alimony is tax deductible, and CS IS NOT

You're getting in CS more than most people make in a year....... next time, I am going to marry for money.
Screw love, it gets you no where!

You get $78,000 a year an you're complaining? Who has legal court ordered physical custody?

Who can claim the kids.

In the agreement (PA) it states...."The $6,500 shall be deductible by Husband and included as income to Wife for Federal Income Tax purposes"...
monthly through 2006. This was signed by the judge. That part is legal. It's the exemptions that were never addressed. Believe me, I would love to have ALL of it allocated as child support.

FYI- He didn't make that much when we got married.

VeronicaGia said:

You get $78,000 a year an you're complaining? Who has legal court ordered physical custody?

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I am not complaining. I live on almost a third of what HE lives on and I have primary custody. 10 mos. after the divorce was final he bought a 1.2 mil. home in a gated community. He is in arrears over $7,000 in equitable distribution payments- that I let him spread over 15 years because he was "broke"........He knows the system and can afford to haggle every detail of the agreement.

JHinPA said:

I am not complaining. I live on almost a third of what HE lives on and I have primary custody. 10 mos. after the divorce was final he bought a 1.2 mil. home in a gated community. He is in arrears over $7,000 in equitable distribution payments- that I let him spread over 15 years because he was "broke"........He knows the system and can afford to haggle every detail of the agreement.

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Well...he can't "haggle" the tax exemption because the agreement is silent on that issue. If the IRS had to decide you would win, because you are the one paying the taxes on the money that supports the kids. You would get the exemptions per the regs anyway....but its just icing on the cake that he isn't technically paying any child support.

If he tried to argue with the IRS that he WAS paying child support....then he would be admitting that some or all of the money isn't alimony.

So claim the kids....and even amend your previous year's returns.

LdiJ said:

Well...he can't "haggle" the tax exemption because the agreement is silent on that issue. If the IRS had to decide you would win, because you are the one paying the taxes on the money that supports the kids. You would get the exemptions per the regs anyway....but its just icing on the cake that he isn't technically paying any child support.

If he tried to argue with the IRS that he WAS paying child support....then he would be admitting that some or all of the money isn't alimony.

So claim the kids....and even amend your previous year's returns.

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Thank you - I will amend. Any knowledge of equitable distribution collection?
Essentially,I am acting as a bank and he defaults 2-3 x per year. He'd be better off with a loan from a bank- at least he could write off the interest??
And I could save all of the atty. fees trying to get him to pay.

JHinPA said:

Thank you - I will amend. Any knowledge of equitable distribution collection?
Essentially,I am acting as a bank and he defaults 2-3 x per year. He'd be better off with a loan from a bank- at least he could write off the interest??
And I could save all of the atty. fees trying to get him to pay.

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You have to take him back to court for contempt on the equitable distribution.....and ask that he be required to pay your attorney fees.

Make sure that you use a GOOD tax preparer (preferibly an enrolled agent) to amend your returns. Now would be a good time to do it because the regular tax season is over and the good ones have time to handle amendments more thoroughly. A solid explanation will need to be included with the amendment (its part of amending a return). A good explanation in your case would be as follows:

Taxpayer is amending the return to include dependents. The taxpayer previously omitted the dependents because her ex-husband previously claimed the children without a signed agreement or signed form 8332 from the taxpayer, despite the fact that the taxpayer has primary physical custody of the children, and the children primarily reside with her. The taxpayer did not understand that she still had the right to claim her children, even though her ex-husband had filed his tax return first.

I would also recommend including a copy of your custody orders/parenting plan with the amended return (saves time later). It may take you a while to get your refunds, and you may be asked to provide additional evidence...however the custody orders/parenting plan should really be enough.

Who claims the kids?

thank you !