FrequentlyAsked Questions

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Post-Divorce Taxes

It depends on what your Marital Settlement Agreement states or what the court orders. 

Most Marital Property Agreements and divorce judgments will allocate the child dependency exemption to one spouse.  Generally, the exemption is alternated between each parent so that one parent claims the child as a dependent in odd-numbered years and the other parent claims the child as a dependent in even-numbered years.  This is not required, and the court or the parents can agree to arrange the dependency exemption in other ways.  For example, if one spouse is disabled and does not file a tax return, then the other spouse may receive the child dependency exemption each year.  Or, if the parents have two children, the parents could agree that each parent will claim one child each year.  Absent an agreement or court order, the parent who has more placement of the child in a calendar year has the right to claim the child as a dependent on his or her tax returns.  

Even with a divorce order or Marital Settlement Agreement that assigns which parent may claim the dependency exemption for a child, the federal Internal Revenue Service (IRS) may require the “custodial” parent to sign a Release of Dependency Exemption Form 8332.  

“Placement,” on the other hand, determines where the child will reside on certain days of the week. In the placement context, the court can award a parent “primary placement,” “shared placement”, or “equal placement.” “Primary placement” generally involves a parent who has the child with him or her for a great majority of the time and the other parent either has no set time with the child or fewer than 92 overnights a year. An “equal placement” schedule generally involves each parent having approximately 182 overnights a year. A “shared placement” schedule is any other placement schedule that is neither primary nor equal (for example, on parent could have two overnights each week and the other parent has five overnights each week).

The court and family law attorneys generally speak of placement in terms of two week increments. For example, you may hear a “7/7 schedule.” What this means is an equal placement schedule with each parent having a full week of placement before the exchange of the child. A different example of an equal placement schedule is a “2-2-3 schedule.” In this context, one parent could have placement every Monday and Tuesday, the other parent would have every Wednesday and Thursday, then the parents would alternate the Friday to Sunday weekends. Because there are no statutory requirements as to how the placement schedule must be arranged, the parents have a great deal of flexibility for reaching a placement schedule.

Each case is unique and the allocation of the dependency exemption can depend on a variety of circumstances.  If the ex-husband is paying child support for the child, then he is contributing to the child’s expenses which could be a reasonable basis in assigning him the child dependency exemption for certain years.   The parents could agree to condition the ex-husband’s right to claim the child as a dependent on his timely payment in full of all child support payments for the year. 

Unlike the dependency exemption, the Head of Household status cannot be negotiated or contracted between the parents.  The parent who has more than six months of placement with the child can claim Head of Household status.   The Head of Household status is a tax filing status (versus claiming a child as a dependent exemption) which can lead to lower taxable income and higher tax refund.   The parent with 183 overnights or greater a year, should qualify to claim Head of Household status.   When the parents have equal placement of the child, the parents can agree in a Marital Settlement Agreement to allocate the placement schedule each year to allow the parents to alternate the right to file Head of Household status.   Nevertheless, the placement schedule of the child is what determines whether a parent can qualify under the Head of Household filing status. 

No.  The IRS determines your tax filing status as of the last day of the year.  Since you were no longer married on December 31st of the year, you cannot file a joint married tax return for the year.   If you had waited until the following year, even on January 1st, to have the divorce granted, then you could have taken advantage of the joint tax filing.  Of course, there are other considerations in filing a joint tax return with your spouse such as the “joint and several liability” that arises from filing a joint tax return with your spouse.   

The soon-to-be-former spouses must trust that the other spouse will report all of his or her income, deductions, and exemptions accurately.  

No.  Child support payments are not deductible to the parent paying the child support nor does the parent receiving the child support payments claim the child support as taxable income on his or her tax returns. 

It depends.  If you have a minor child and there is a child support order in effect, the answer is yes. Wisconsin law requires that the child support order or Judgment of Divorce include a requirement that both parties must exchange “financial information each year.”   This “financial information” is most often construed to consist of a parent’s tax returns.   A party who fails to exchange his or her tax return while there is a child support order in effect may be found in contempt for failing to do so.   The purpose of the exchange of this financial information is to inform the other parent of whether there is a need to modify the amount of child support.  If so, the party seeking an increase or decrease of the child support still will need to either come to an agreement with the other parent or file a motion to modify the child support with the court.

But if there are no minor children or no child support order in effect, there is no duty to exchange tax returns each year unless the Judgment of Divorce or Marital Settlement Agreement specifically references such an obligation (which would be rare). In some cases, the obligation may be negotiated or ordered when a former spouse is receiving an award of maintenance (i.e. alimony), but it is not required under state law.

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