Family Issues

A noncustodial parent does not lose the right to claim the child's medical expenses (health insurance, drs, dentists prescription drugs etc.) as an itemized deduction on IRS Schedule A (subject to the 10% or 7.5% AGI limitation)if both the custodial and noncustodial parent together provide more than half of the support of the child and either had custody for at least six months during the year.

Divorced parents are entitled to custody of their minor children after death of a parent who had sole custody unless a court order provides otherwise. In general, It must be proven that it is specific detriment to the child in order to remove a child from the custody of a surviving parent and place the child in the custody of a non-parent. The court makes decisions based on the best interests of the child. Because parents have superior rights to custody over all other non-parents, a different standard is used when making custody decisions between a parent and a non-parent. If a court awarded sole custody to one parent, this is not proving that it would be detrimental to the child for the other parent to have custody. Sometimes a court must choose between 2 good parents. A parent with sole custody does not have the right to give or "will" this custody to someone else. Any parent can nominate a guardian for their child in their will. If the other parent is unable or unwilling to take charge of the child after your death, the court must consider your guardianship petition. The court must still consider the child's "best interests" and may grant guardianship to a non-parent.

Not necessarily. Cohabitation may be technically illegal in your state. The IRS will follow the state law in determining whether your relationship is in violation of any state domestic law. When no local law is violated, a dependency exemption is allowed.

If the noncustodial is paying more than 50% of the child's support, there is no court order regarding the dependency exemption. The noncustodial parent gets the exemption if the parents were never married based on the dependency support test. You will probably need to fill out a multiple support form from the IRS to determine which parent actually pays more than 50%. If the parents are divorced or separated the dependency custody test applies. The parent who has custody more than 50 percent of the time is entitled to claim the exemption. The noncustodial spouse who claims the exemption will have to get Form 8332 (release of exemption) signed by the custodial spouse.

Generally, the wording in the divorce or separation decree identifies the payments as Alimony or something other than Alimony, such as child support. Alimony is income to the recipient and an adjustment to income for the payer. Generally, for payments to be considered alimony, seven characteristics should be present. The payments are in cash or check. The payment must be paid under a divorce decree or separation instrument. The divorce decree or separation agreement cannot designate the payment as a payment which is not deductible by the payer or includable in gross income by the recipient. The recipient and the payer must not be members of the same household. The payments must not be treated as child support. The taxpayer and spouse may not file a joint return with each other. There must not be a liability to make any payment for any period after the death of the spouse.

No. There is no minimum payment period. Recapture of alimony amounts may apply where payments decrease by more than $15,000 within the first three years of the divorce.

Yes. By mutual agreement one spouse can forego the deduction for alimony and the other spouse can receive the benefit of not being required to pay taxes on the alimony received.

The deductible alimony payments made in the first year or second year may have to be recaptured as income in the third year where the alimony payments within the first 3 years decrease by more than $15,000. Payments made in the second after the separation year are recaptured if the payments exceed the payments in the third post separation year by more than $15,000. Payments made in the first after the separation year are recaptured as income if they exceed the "average" payments made in the second post separation year and the third post separation year by more than $15,000. The recaptured amount is reported on IRS Form 1040 on the line Alimony received with a notation Alimony recapture with the payee spouse’s social security number.

If your parents are separated or divorced, the Custodial parent is responsible for filling out the FAFSA. The custodial parent is the parent with whom you lived the most during the past 12 months. This is not necessarily the same as the parent who has legal custody. If you did not live with one parent more than the other, the parent who provided you with the most financial support should fill out the FAFSA. This is probably the parent who claimed you as a dependent on their tax return. If you have not received any support from either parent during the past 12 months, use the most recent calendar year for which you received some support from a parent or lived with either parent.