Source: http://rochesterfamilylawyer.korotkinlaw.com/category/federal-law/
Timestamp: 2019-04-18 20:36:13+00:00

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I have previously discussed some of the tax issues related to divorce, maintenance and dependency exemptions. As the tax season approaches, here is some additional information that may be of assistance.
In a typical divorce, unless the parties have been legally separated prior to December 31, they are still able file a joint return. By filing a joint return, both spouses will be jointly and separately liable for any errors, omissions or deficiencies on the tax return. If the parties are going through divorce, the issues related to division of any tax refunds may also become complicated.
If you are legally separated from your spouse, you are able to file as a head of household if you provided more than half the cost of keeping up a home for a child, dependent parent, or other qualifying relative for more than half the year. According to the IRS, to claim head of household, you must either be unmarried or considered unmarried on the last day of the year. In addition, the Abandoned Spouse rule may be applicable. In order to qualify under the rule, if you and your spouse lived apart for the last six months of the year, you would be considered unmarried for the purpose of this filing status under the Abandoned Spouse rule. If you meet the other two requirements for this status, you would be eligible to file as Head of Household. The other two requirements are as follows: 1) paying more than half of the cost of keeping up a home as of the last day of the tax year; 2) a dependent child or other relative lived with you for more than half the year or you have a dependent parent (dependent parents are not required to live with you).
A party is required to file as single if he or she was unmarried as of December 31, or if legally separated as of the end of the year and does not qualify for another filing status.
There are other tax advantages and disadvantages that depend on the filing status elected by the party. Please note that the above discussion is not tax advice, and these issues should be discussed with your tax professional.
As we come to the end of the year, I am often asked about different tax issues applicable to my clients’ situations.
If my client’s divorce will not become final before the end of the year, the parties can still file a joint tax return. Once the judgment of divorce has been filed, an ex-spouse can file the return as a head of household, if he or she has paid for over half the maintenance of the household, and has a dependent living at his or her home for over half the year.
When the parties are divorced, only one of them can claim the $3,500 child dependency exemption on their tax returns for 2008. The parent claiming the dependency exemption is also allowed a $1,000-per-child tax credit for children younger than 17, as long as his or her income is not above the following cut-offs. For a married couple filing jointly, it is $110,000, for a married couple filing separately, it is $55,000 per spouse, and for all others, it is $75,000. If the applicable income exceeds the above thresholds, the amount of the child tax credit is reduced proportionately.
Usually, it is the person named as the custodial parent in the child custody portion of the divorce decree that is allowed to claim the child as a dependent. If the divorce decree does not name a custodial parent, then the parent with whom the child has lived with the longest throughout the year is the custodial parent.
A non-custodial parent, however, can claim the child dependency exemption, as long as the custodial parent signs a waiver promising not to claim the exemption. This is typically accomplished by the use of IRS Form 8332. However, the recent amendments of the IRS regulations dealing with this issue have complicated this issue. The final regulations provide that a release not on a Form 8332 must be a document executed for the sole purpose of releasing the claim. A court order or decree or a separation agreement cannot serve as the written declaration. If a release of a claim to a child is for more than one year, the noncustodial parent must attach a copy of the written declaration to the parent’s return for the first tax year for which the release is effective. Copies must also be attached to returns for later years. Under the final regulations, a custodial parent who released the right to claim a child, can revoke the release for future tax years by providing written notice of the revocation to the other parent. The final regulations require that the parent revoking the release notify, or make reasonable attempts to notify, in writing, the other parent of the revocation. What is a reasonable attempt is determined under the facts and circumstances, but mailing a copy of the written revocation to the noncustodial parent at the last known address or at an address reasonably calculated to ensure receipt satisfies this requirement. A revocation can be made on Form 8332, or successor form designated by IRS. A revocation not on the designated form must conform to the substance of the form, and be in a document executed for the sole purpose of revoking a release. A taxpayer revoking a release may attach a copy rather than an original to the taxpayer’s return for the first tax year the revocation is effective, as well as for later years.
(4) the parents are divorced, legally separated under a decree of separate maintenance, separated under a written separation agreement, or live apart at all times during the last six (6) months of the calendar year.
If a non-custodial parent claims the child exemption first, and without the custodial parent’s permission, he or she is likely to receive the exemption temporarily. However, once the custodial parent files his or her tax return including the exemption, and IRS notices that a child’s social security number has been included on two different tax returns, then both parties would be notified by IRS that only one party is entitled to the exemption, and the tie-breaker rule would be used to resolve this situation. This rule says that if two parents claim that a child as a dependent, the parent with whom that the child lived with the longest during the year, receives the exemption. If the child had spent the same amount of time with both parents, then the parent that had the higher adjusted gross income would get the exemption. The parent who was not entitled to the exemption would have to repay the tax, plus penalties and interest.
Regardless of who the custodial parent is, if the non-custodial parent pays for any of the child’s medical bills, these costs can be a deduction, subject to appropriate income limits. Child-care credit for work-related expenses can be claimed for children younger than 13.
The spouse who pays maintenance or spousal support can also receive a tax deduction for these payments, even if they aren’t itemized—as long as the payment amounts are stated in the divorce agreement or the judgment of divorce, and actually paid. The spouse who receives maintenance must pay taxes on it. For child support, however, there is no deduction for paying it and no taxes are paid by the parent receiving it. Assets transferred from one spouse to another during a divorce are not generally taxed.
Please note that the above discussion is not a tax advice and these issues should be discussed with your tax professional.
When either a husband or wife marries someone who is not a legal resident of the United States and brings them to this country, as a part of his/her immigration application, the spouse who is a citizen of the United States certified that he/she would provide support for their spouse once that spouse is in the United States and would not allow her to become a public charge. See 8 U.S.C. §1182(a) (which prohibits immigration when the immigrant has no means of support and is likely to become a public charge). This requirement is satisfied by what is known as an affidavit of support, I-864 form. By signing it, the party certifies that he/she would provide to their spouse with income of 125% of the Federal Poverty Level guidelines. For 2008, the Federal Poverty Level guidelines state that the poverty level income for a household of one is $10,400.00, and the corresponding income level under the affidavit of support is $13,000.00.
According to the Appellate Division, Fourth Department, where a party signs an affidavit of support, from I-864, that affidavit is a legally enforceable contract. Moody v. Sorokina, 40 A.D.3d 14 (4th Dept. 2007). In that case, a Ukrainian national emigrated to the United States to marry her eventual husband in New York. When the husband filed for divorce several years later, the wife sought to enforce the Affidavit of Support for purposes of determining the amount of support payments to be made by the husband. While the trial court rejected the wife’s argument and held that the affidavit could not be enforced in court by private parties, the Appellate Division, Fourth Department reversed the lower court and held that the affidavit of support was enforceable. The Appellate Division held that the execution of a affidavit of support creates a legally enforceable agreement between the parties involved that can be enforced by the sponsored immigrant in any federal or state court. Id. at 401. Moreover, the Fourth Department explained that the terms of the agreement are not affected by a subsequent judgment of divorce. As such, the agreement remains fully binding on all parties until the sponsored immigrant “has worked 40 qualifying quarters of coverage,” as defined by the Social Security laws. The enforcement of the right of support also includes attorneys fees. Id.
Therefore, when the spouses separate and the immigrant spouse is unable or unwilling to work, the spouse who is a citizen of the United States will be responsible for their spouse’s support until such time as that spouse becomes self-sufficient, or perhaps even indefinitely.
Periodically I am asked about jurisdictional issues that arise when one parent and/or their child relocates to out of state and the other wishes to petition the court for child custody or visitation, a modification or change in custody or enforcement of a custody order. Although there are cases where the noncustodial parent seeks court intervention because of the fact that the custodial relocated without permission, there are in fact times where consent was given initially but subsequent events may raise a need for a modification or enforcement of the current custody order.
New York has adopted the Uniform Child Custody Jurisdiction and Enforcement Act (“UCCEJA”). This statute attempts to discourage interstate child abductions and to prevent “forum shopping” by parents trying to remove the child to a state to avoid another state’s jurisdiction. The statute explicitly sets forth the circumstances in which New York courts have jurisdiction, particularly when one parent and/or the child no longer resides in New York. While UCCEJA issues are most commonly seen in family court petitions seeking custody or visitation, modifications and enforcements of custody or visitation orders, it also applies to guardianship, divorce, paternity, child abuse or neglect, termination of parental rights and domestic violence cases. Since jurisdiction is usually not in issue when the child lives in New York or has moved from the state within six months of filing the petition, the UCCJEA helps to iron out jurisdictional issues in other circumstances where the child’s residence is in question based on a move from the state or his or her physical presence in the state. These include cases where the noncustodial parent lives in New York but the child does not; where the child moved from the state more than six months prior to the filing of the petition (but without the noncustodial parent’s consent or to somewhere unknown to that parent); or where the child is in New York and there are concerns of abuse or neglect. These are all scenarios that require the application of the UCCJEA.
The UCCJEA sets forth alternative situations for asserting jurisdiction, which are: 1) where it is in the best interests of the child based on the “significant connections” to the state and there is “substantial evidence” within the court’s jurisdiction concerning the child’s current or future care; 2) where there is an emergency situation ; 3) where no other state has jurisdiction or 4) another state has refused jurisdiction.
Situation 1: This section only applies to cases where there is no home state and there has not been a home state for the past six months. This limitation is imposed by the federal statute, the Parental Kidnapping Prevention Act which trumps the UCCJEA because of the constitutional supremacy clause (Article VI, Clause 2). This act serves to provide more uniformity amongst states, resolve conflicts between various states that may have an interest and to address the inconsistency caused by the application of the prior act, the Uniform Child Custody Jurisdiction Act (“UCCJA”), which was the basis for states applying their own version resulting in inconsistent orders. Its objective is to avoid forum shopping, while encouraging the preference for the issuing state to maintain jurisdiction so long as one of the parents or the child remains a resident of the state. Based on this, as well the two part analysis required to meet the criteria, there are rare cases where this particular section applies. For example, showing that there are “significant contacts with the state” may be attainable, but proving that there is “substantial evidence” concerning the child’s current or future care is much more challenging.
Situation 2: This section applies mainly in child abuse or neglect cases or where the child was abandoned by the parent or legal guardian. However, although the act serves to limit jurisdiction to situations where some immediate attention should be given, the statute is strictly construed. In other words, a mere allegation of abuse or neglect is not enough, the courts must be convinced that abuse or neglect actually exist, placing the child’s physical and/or emotional well-being into question. And even still, the courts may assert only limited or temporary jurisdiction, deferring the case to the home state of the child for further proceedings. Furthermore, the child must physically be present in the state, and cannot be removed from the state for any reason under this provision.
Situation 3: This section typically applies in cases where the child has not had a home state anywhere during the previous six months, (no significant connections or emergency situation exists). This is a safety measure included in the statute to avoid the case going unheard by any court. Cases like this arise when the child moved from New York, then to another state for a short period (less than six months), then back to New York less than six months before the filing of the petition.
Situation 4: This section applies to cases where another state, presumed to have been the child’s home state, has denied jurisdiction based on its own provisions. Typically states will deny jurisdiction for lack of significant ties, there is a case already pending in another state, there is a more convenient forum or merely for parties’ failure to ascertain legitimate residence (as is the case when parents take the child from another state and hide him or her from the noncustodial parent long enough to establish jurisdiction).
When it comes to modifying a child custody order in New York that was issued by another state, New York will not exercise jurisdiction unless the state that entered it no longer has jurisdiction. So even if it is the non-custodial parent that remains in the issuing state, while the child and the custodial parent relocated to New York, that state still has jurisdiction unless it declines jurisdiction. Conversely, New York will enforce a custody order if the child and one parent lives in the state, if the order is registered in New York.
In 1984, the New York Court of Appeals decided Majauskas v. Majauskas, 61 N.Y.2d 481 (1984). This is the case that decided that the portion of the spouse’s pension, earned during the marriage, is marital property subject to equitable distribution. To the extent that a pension was earned during the marriage, it is, for purposes of New York law, considered marital property. The Majauskas decision sets forth the formula that normally is to be followed in dividing a pension plan. Along with pension plans, other types of retirement assets are divided in a typical divorce case. Retirement assets are usually divided by a QDRO.
A QDRO stands for a “Qualified Domestic Relations Order”. It is an order required by the 1974 federal statute known as ERISA (Employees Retirement Income Security Act), and applies to certain pension vehicles. QDRO may transfer retirement benefits from an employee-spouse to a spouse, former spouse or child of the employee. It must comply with the requirements of state law, as well as ERISA and other federal laws. The state domestic relations law aspects of a QDRO must be approved by the domestic relations judge, while the federal law aspects must be approved by the plan administrator from which the benefits are to be paid.
QDRO’s deal with participants and alternate payees. A “participant” is an employee who participates in either an employer sponsored or a union-sponsored qualified employee benefit plan. An “alternate payee” is a person to whom benefits are transferred in a QDRO and that person must be a spouse, former spouse, child or other dependent of the participant.
A defined contribution plan is a plan that requires the establishment of an individual account for each participating employee and provides benefits only from the amount contributed to the employee’s account, together with any income, expenses, gains or losses that are attributable to the account. Under a defined benefit plan the controlling factor is the benefit that will be provided to the employee upon his/her retirement and the amount contributed each year is actuarially computed to produce the desired benefit at the time of an employee’s retirement.
(11) Hybrid plans (features of both defined benefit and defined contribution) – used by many public employee and teacher retirement programs.
Where both spouses have a pension, each may get a portion of each other’s pension, or create some other arrangement that benefits both parties. It is also possible to trade off pensions for other property in the marriage, or a spouse may waive his/her right to receive the pension.
Division of a pension is not automatic. The court has discretion to award the entire pension to the earner where, for example, there is a significant disparity in income.
In a case of first impression, defendant, the father of twin daughters, was convicted by a jury in the Federal Court for the Southern District of New York of two counts of willful failure to pay a court ordered child support obligation in violation of 18 USC §228(a). One of the questions of first impression for the Second Circuit Court of Appeals was “whether violation of a single child support order which covers two children gives rise to one or two violations of 18 USC §228.” Conviction is affirmed on one count, vacated on the second, and the matter remanded for resentencing. When Congress leaves a statute ambiguous as to the proper unit of prosecution, “the ambiguity should be resolved in favor of lenity.” Here, because the statute does not clearly distinguish between a “support obligation” and a “court order,” defendant’s willful failure to comply with the underlying order of support for his two daughters justifies the prosecution of only one count for willfully violating an order of support, rather than two counts for failing to pay support for his twin daughters. USA v. Kerley. Decided 9/25/08.

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