Other Issues in Divorce Including Dependent Exemptions and Child Support Issues
The parent paying child support is not permitted to deduct the amount from income, whereas the parent receiving the payment is not required to include the amount in gross income calculations. Our divorce attorneys consider these rules when determining accurate payment schedules and, when appropriate, may negotiate direct payments for health insurance, medical bills or education in lieu of a portion of the child support if it limits tax liability.
Special IRS rules apply to exemptions for children of divorced parents. Either the custodial or noncustodial parent — but not both in the same year — is permitted to apply the exemption. This tax exemption can add up to significant reductions in tax liability and is an important aspect of settlement negotiations. The Law Offices of Schwartz | White strategizes the most desirable options for our clients, which may include:
Each parent taking the exemption on alternate years
The custodial parent signing an agreement granting the right to the exemption to the noncustodial parent
The noncustodial parent forgoing the exemption in return for another benefit
The former spouse who pays support can deduct this amount from income, whereas the recipient must include the amount in taxable income. For this reason, our lawyers consider tax implications when deciding whether to pursue a lump-sum payment or yearly payments of support. Also, clients may prefer to make spousal support payments rather than other types of property settlements that do not provide tax deductions.
Consult our knowledgeable Florida lawyers about divorce-related tax issues
To learn more about how divorce affects your tax obligations, call the Law Offices of Schwartz | White at 561.391.9943 or contact us online to schedule an appointment. We serve all of South Florida from our Boca Raton office, conveniently located off I-95 in the Bank of America Building. Free parking is available.