An attorney to help understand the tax implications of your child support order.

Taxes can be reduced by allowed deductions and exemptions. Deductions reduce the amount of taxable income, and exemptions reduce the adjusted gross income, such as standard withholding or dependency exemptions. If you pay child support or receive it, the Internal Revenue Service (IRS) has a strict set of rules in place to control the deductions and exemptions that you are allowed because of the payment or receipt of child support. Often, the terms of your divorce decree and related agreements will control the extent to which any tax offsets are available. For that reason, it is very important to consult an experienced Family Law attorney at Holstrom, Block & Parke in Corona, California, regarding the tax implications of the child support arrangements reached in your case.

Child Support: A Nontaxable Event

Child support payments are not taxable. That means the parent making the payments cannot deduct them from income and their receipt is tax free to the parent who gets the payments on behalf of their children. To meet the definition of child support payments, the payments must be so designated in a divorce or separation agreement. “Family support” payments will be treated like alimony and taxed as income to the recipient unless the agreement under which they are paid specifically designates a portion or amount as child support.

Child Support and Dependency

Even though the payment and receipt of child support does not create a tax event in and of itself, there is an important tax consequence related to child support payments: who gets to claim the children as dependents in order to receive the dependency exemption?

The IRS says that you must provide more than half of a person’s total support in a calendar year to claim an exemption based upon dependency. In order to resolve dependency questions about the payment of child support, the IRS has created a special rule that controls the circumstances of how and when the payment of support creates an exemption. The rule applies when:

• The parents are divorced or legally separated under a decree of divorce or separate maintenance, separated under a written separation agreement or living apart at all times during the last 6 months of the calendar year
• One or both parents provide more than half the child’s total support for the year
• One or both parents have custody of the child for more than half the calendar year

The rules do not apply if support is determined under a multiple support agreement or the child’s parents were never married.

The special rule states that the parent who has custody the greater part of the year is the custodial parent and that parent will be treated as the person who has provided more than half of the child’s support. Unless the parties otherwise agree, the custodial parent will be entitled to claim the tax exemption for the child if the other dependency criteria are met. The actual number of days the child spends with a parent will determine the definition of custodial parent where custody is split or where legal proceedings make custody status unclear during any tax year.

The rule allows the non-custodial parent to be treated as the parent who has provided more than half of the child’s support for dependency purposes if the parties agree to that. In order to claim the exemption, the non-custodial parent must have either:

• A written declaration signed by the custodial parent stating that he or she will not claim the child as a dependent
• A signed decree or agreement executed after 1984 that states the custodial parent will not claim the exemption for the tax year and the non-custodial parent attached the appropriate documentation to his or her return
• A signed decree or agreement executed before 1985 that provides for the non-custodial parent to claim the exemption along with a statement that at least $600 was in fact given in support to the child, unless there is a modification to the pre-1985 agreement that says that provision doesn’t apply

Non-custodial parents must attach the appropriate agreement or written declaration to their taxes. The written declaration must be made in a format that follows a particular form.

Talk to a Lawyer

Tax issues concerning support payments and dependency status can be complex. An attorney experienced in these areas can be an invaluable asset. Contact Holstrom, Block & Parke in Corona, California, for more information today.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

It is important for parties going through a divorce to understand what monies can be considered income under the child support guidelines used by the court. However, understanding what is or is not considered income is not simple or easy. There are many pitfalls and the calculation may be off by hundreds if not thousands of dollars, if you don’t have a skilled child support attorney to guide you.

California Family Code Section 4058,“Considers gross income that from any source except for child support payments that are actually received or public assistance programs where the eligibility for program assistance is based on need.”

The process of determining income begins when the divorce petition is first filed. Child support is one of the most important issues in a divorce case. Talk to an experienced child support attorney who is knowledgeable in how the support is calculated and can guide you through the entire process.

You ask, “What is income for support purposes”? By statute, income includes, but is not limited to:

• salaries and wages, including tips, bonuses, commissions, overtime pay
• rents from rental properties
• dividends, pensions, interest income, income from a trust or annuity
• workers compensation benefits
• unemployment insurance
• disability insurance benefits
• social security benefits and alimony (spousal support paid by someone other than the other parent) received from an unrelated case to the parent seeking child support
• SSI might not be considered income in some instances because it’s based on need
• recurring gifts
• lottery winnings (when taken as a lump sum) and gambling winnings count as income
• etc.

When it comes to business owners, their income is typically the gross revenues of the business minus reasonable business expenses.

In addition, income includes other perks, such as the use of a company car, free housing and reimbursed expenses (expense account). But perks/employee benefits are not necessarily or automatically considered income: the court has discretion.

Is there any monies that aren’t used to determine income? Yes, but there are exceptions to each rule. Below are just a few examples of funds not considered income:

• student loans that are used for books and tuition are not considered income
• life insurance death benefits
• future speculative income
• stock when it cannot be liquidated or is received in connection with the sale of a business
• home equity
• personal injury proceeds (However, interest from invested proceeds are considered income)
• gifts of a non-monetary nature
• inheritance money
• etc.

The determination of child support and what is and what is not income in a child support case can be very complicated.

If you have a child support matter, whether you are the one facing a child support award against you or seeking child support, you owe it to yourself to contact the experienced family attorneys in the law offices of Holstrom, Block & Parke.

We will guide you through your issues so you can focus on moving forward with your life. Contact us at one of our conveniently located offices in Orange, Riverside or San Bernardino Counties.

While going through a divorce, people tend to have difficulty understanding exactly how the process works, what their own conflicting emotions mean, and how to handle this new situation they find themselves in. For families with children, the situation can be even more challenging because talking to children about the problems between mom and dad is just not the easiest thing to do.

You feel uncomfortable discussing this so you’re not sure what to say to anyone about it at all. You may not have even admitted to yourself that your marriage is ending. At Holstrom, Block & Parke, we help parents navigate their way through the often very complicated divorce process. In so doing, we help their children understand and deal with this reality at the same time to ensure that they come out of the process relatively unscathed. Our attorneys can start using their experience and resources today to help you do the same. For a free telephone consultation with one of our attorneys!

Tips on Communicating with Your Kids

As parents, we want to protect our children and prevent them from enduring unnecessary hardship and emotional strain. Unfortunately however, divorce and separation, which in many cases puts a heavy burden on our children, are not always avoidable. Whether you are just starting the divorce process, or you are years into a child custody agreement, communicating with your children is probably one of the single most important steps you can take to protect their best interests.

• Be honest with your children. Divorce and separation will inevitably bring change to both your life and the lives of your children. For most, change will bring about a mix of emotions—some positive, some negative. Make sure that you have an age appropriate conversation with your children about your situation in order to help them manage their expectations. Pretending that nothing is going to change will set them up for disappointment and lower your credibility.
• Set aside time to regularly communicate with your children. Making communication a priority will show your children that you care about their feelings and value their input. Sit them down and tell them that they are a priority in your life. This will create an environment where your children feel safe to inform you if they are having trouble coping with things.
• Use non-verbal cues to show your children you are there for them. Communication is not limited to words. There are a variety of non-verbal ways to communicate with your children in order to reinforce to them that they are a priority in your life. Smile often, hug your children, and make frequent eye contact with them. This will signal to them that you care about them and their feelings. Remember that showing them affection can help to relieve a lot of the stress that your children may be going through during this hard time.
• Don’t talk negatively about your ex to your children. By venting to your children about your ex, you may be inadvertently causing unnecessary conflict. Children frequently feel caught in the middle of their parent’s breakup. Letting your children know that you them spending time with your ex may help to reduce the stress that they may feel from being caught in the middle. Remember that even though your ex may be the world’s hardest person to get along with, it is in your children’s best interest to have meaningful, frequent contact with him/her.

Overwhelmed by the thought of getting as divorce? Talk to an attorney who can help you manage the process in a way that works for you. Call our office directly today!

Child support payments are legally enforceable through court orders.

The parent who does not have custody is usually ordered to help pay for the expenses of raising his or her child, such as food, clothing, housing, and medical care. What happens if the mother of the child remarries and her new husband wants to adopt her child?

A child is the responsibility of the birth parents, not a new spouse for either one of the parents. A new stepfather is not responsible for children that are not his biological children.

Remarriage does not affect a father’s responsibility to continue to pay his fair share of the child’s necessary support.

However, the only way the biological father can get out of paying child support is if he signs over his rights as a parent. The mother has to agree to this as well. If the biological father is willing to terminate his rights, you may seek a termination of parental rights and stepparent adoption.

If the termination occurs, any child support obligation ceases. If there is no agreement, you must proceed with a contested termination of parental rights, which can be much more difficult. There is hope though – abandonment financial and physical may be a basis for such an action.

Then, if the stepfather adopts the child legally, financial responsibility of the child becomes his and the order for child support should be closed at that time for the biological father.

It’s not at all unusual for the non-custodial parent who has little or no relationship with his child to consent to the adoption of that child by a stepparent. Not always, but often, the adoption comes after the non-custodial parent has repeatedly failed to pay court-ordered child support.

In the event of a divorce between the mother and her new husband, the father who adopted the child would still have to pay support.

If you have remarried and your new husband wants to adopt your child, it would be wise to consult an experienced family law attorney to discuss your legal rights and options. Every case is different. Contact the family law offices of Holstrom, Sissung, Marks & Anderson for the help you need. Let us guide you through these complex issues so you can focus on moving forward with your life.

To learn more visit us online, send us a message, or call us we are Southern California’s Top Family Law Attorneys Holstrom, Sissung, Marks & Anderson APLC.