Opinion ID: 1305252
Heading Depth: 1
Heading Rank: 12

Heading: Dependency Exemptions

Text: Under Nebraska law, a state court having jurisdiction in a dissolution action has the power to allocate tax dependency exemptions as part of the dissolution decree. Hall v. Hall, 238 Neb. 686, 472 N.W.2d 217 (1991). In the present case, the district court awarded all dependency exemptions to Kelly, provided that he is current on his child support payments as of December 31 of each year. A tax dependency exemption is nearly identical in nature to an award of child support. Hall v. Hall, supra . The dependency exemption for income tax returns is an economic benefit. Prochaska v. Prochaska, 6 Neb.App. 302, 573 N.W.2d 777 (1998). Based on these propositions, Teresa argues that there is nothing in the record which would support the award of exemptions to Kelly and that the district court therefore abused its discretion in making the award. Teresa's argument fails to correctly consider the mathematical computations involved with dependency exemptions and calculations of child support income. The district court's child support calculations indicate that in arriving at the amount of Kelly's income available for support, it first considered his adjusted gross income as reflected on his tax returns and then, pursuant to the child support guidelines, added back the amounts of depreciation claimed in each return. It then subtracted the amount of state and federal income tax paid by Kelly in arriving at his net income for child support purposes, averaging the net amount over a 3-year period. The taxes deducted were computed by taking into account the exemptions for all four children. This mathematical analysis reveals that awarding Kelly the dependency exemptions results in increasing the amount of his income for the purposes of calculating child support. The dependency exemptions decrease the amount of federal and state income tax Kelly pays, resulting in an increase in his net income for purposes of calculating child support and a concomitant increase in the amount of tax-free child support income that Teresa receives each month. See Kriesel v. Gustafson, 513 N.W.2d 9 (Minn.App.1994). In addition, the district court's child support calculation reflects that Kelly will be providing 91 percent of the children's monthly support. We therefore conclude that the district court did not abuse its discretion in awarding the exemptions to Kelly.