wdh@faron.UUCP (Dale Hall) (01/14/86)
Does anyone out there have any idea why the 1985 Federal Income Tax rules have eliminated the exemption for children of a non-custodial parent? Earlier rules stipulated that the parent who provided the bulk of financial support (via child support, not alimony) was entitled to claim the child as a dependent. This year, this is allowed only if one of the following two conditions is met: (i) the custodial parent waives all rights to such an exemption (via some official IRS form which must be filed with the 1040 of the non-custodial parent), or (ii) the divorce decree (pre - 1985) specifically stated that the non-custodial parent shall retain the dependency exemption. This action seems in some way to be related to the recently aggressive stand taken by the Federal government towards protecting the child-support rights of children --- for instance, income can be attached, Federal tax refunds can be seized, and perhaps several other avenues exist, when a person fails to meet the obligations of support. However, this seems virtually calculated to punish those who do support their children after divorce. Anyhow, I'm really curious as to any non-cynical reasoning of this point. Answers can be mailed to me at my address above, or if the topic is perceived as of more general interest, simply responding through the net is adequate. I'll just sit here with bated breath for the answers to roll in.
miorelli@pwa-b.UUCP (Bob Miorelli) (01/16/86)
Actually the old vs. new rules were incompletely stated. Here it is: OLD RULES: If the divorce decree states that the non-custodial parent claims the dependent AND that parent provided at least $600 of child support then the non-custodial parent may claim. Otherwise the custodial parent may claim anyway. If the divorce decree doesn't state who may claim, and the non-custodial parent provided at least $1200 child support, then the non-custodial parent may claim UNLESS the custodial parent can prove that he/she provided more support. If the divorce decree doesn't state and the non-custodial parent provided LESS THAN $600 child support, he/she cannot claim. If the divorce decree doesn't state, and the non-custodial parent provide at least $600, but less than $1200 support, the parent with the greater support may claim the deduction. NEW RULES: The custodial parent may claim the exemption UNLESS one of the following: A pre-1985 divorce decree is in effect AND it states that the non-custodial parent may claim the exemption AND the non-custodial parent provide at least $600 in support (the old $600 dollar rule) or The non-custodial parent specifically allows the non-custodial parent to claim the exemption. The non-custodial parent must attach a written statement to his/her return signed by the custodial parent specifically allowing the transfer of the dependent exemption. (Form 8322 (i think)) may be used for this purpose. In addition, the child is considered a dependent of BOTH parents for claiming medical expenses. The parent who paid for medical care may claim that expense regardless of who is claiming the dependent. Now, why all this?? More often than not, the child was being claimed twice. Also, the custodial parent almost always provides the greater support. Remember, support is anything and everything spent on the child's behalf. Included is the fair rental value of the home including furnishings, food, and utilities divided by the number of people living in the home, plus anything spent directly on the child (clothing, haircuts, vacations, medical care, child care, movies, etc., etc., etc.) Almost always the custodial parent provides over 50% of the support. Any other questions to me directly. -->BoB Miorelli, Pratt & Whitney .... also, H & R Block tax preparer and course instructor philabs!pwa-b!miorelli -- -->BoB Miorelli, Pratt & Whitney Aircraft philabs!pwa-b!miorelli utah-cs!utah-gr!pwa-b!miorelli
dave@lsuc.UUCP (David Sherman) (01/16/86)
From: wdh@faron.UUCP (Dale Hall) > Does anyone out there have any idea why the 1985 Federal Income Tax rules > have eliminated the exemption for children of a non-custodial parent? Earlier > rules stipulated that the parent who provided the bulk of financial support > (via child support, not alimony) was entitled to claim the child as a > dependent. This year, this is allowed only if one of the following two > conditions is met: (i) the custodial parent waives all rights to such an > exemption (via some official IRS form which must be filed with the 1040 of > the non-custodial parent), or (ii) the divorce decree (pre - 1985) > specifically stated that the non-custodial parent shall retain the > dependency exemption. Although I'm not familiar with U.S. tax policy, this sounds like quite a reasonable anti-avoidance provision to me, and is effectively the same as the limitation in s.109(4) of the Income Tax Act (Canada). If the spouses are separated or divorced, both might try to claim the deduction otherwise. Denying it by statute to the non-custodial parent unless otherwise agreed is reasonable. Note that the intention is not, as suggested, to "punish those who support their children after divorce", but to make sure that the issue is addressed in the settlement between the parties, whether that be by contract or court order. In theory, at least, the issue of who gets to claim an exemption for the children is just one of the issues on the bargaining table (or at litigation), along with custody, the house and who gets the pet budgie. Dave Sherman (just another tax lawyer...) The Law Society of Upper Canada Toronto -- { ihnp4!utzoo pesnta utcs hcr decvax!utcsri } !lsuc!dave