Discussion:Head of Household Status vs. Physical Custody Status

Today, we met with the mediator again, to discuss future tax filing issues. I requested that we both retain head of household status, with one child each, since our time and expenses with the children are nearly equal. In fact, my expenses are actually greater, since I have to pay my soon to be former spouse $1,089 per month.

According to the mediator, I am not entitled to claim head of household status unless I can prove to the IRS that I actually pay the majority of the children's expenses. I'm not sure if the mediator, who is a former family court judge, actually knows what he is talking about. However, even if he is correct, I'm sure I can prove this, based on the ridiculous child support payment I make every month.

Can anyone shed any light on this subject for me, with references to the specific IRS code governing this issue? From my perspective, I contribute more to the children's finances than my spouse does, since we have nearly equal household expenses. My child support payment is the difference.

Please help if you can. My trial starts on Tuesday.

Thanks

GK

You are unmarried or considered unmarried on the last day of the year. You paid more than half the cost of keeping up a home for the year. A qualifying child (person) must live with you in the home for more than half the year (except for temporary absences such as school).

You cannot both claim the child.

you may find the third item hard to qualify for if you are not the primary custodian.

Are you represented by competent legal counsel who understands both the legal and tax ramifications of divorce?

Isovegas: Ask for a divorce degree that state which child will you be entitled to claim as your dependent. It would be better to retain the youngest one : more years ahead. Child support is not dedcutible, but it still count as your support. Your ex-wife should be reasonable. If you pay your burden and if the kids are spending with you a big amount of time I did not re-read the rules. But I don't see any problems that both of you can retain the H of H status in your situation.

If Mom keeps kids 4 days per week and Dad keeps kids 3 days per week, Dad will not be able to claim HOH status because he does not meet the test of having provided a household which is the principal place of abode for the kids for more than 1/2 of the year. Amount of support provided is irrelevant. If he wants both Mom and Dad to be able to retain HOH status, one child should be assigned to Mom for 4 days, the other to Dad for 4 days. (Probably a bad idea logistically.)

Solomon is prob thinking the itemizing , the deduction is higher than the amount provided by the standard ded for H of Household. Wait for his answer.

Two different situations are here. First : Dependency and second H of Household status. The first one: There are special rules for Divorced or Separated Parents. The Working Families Tax Relief Act of 2004 modified the law for 2 005 and latter years. Isovegas could claim one-or both- children as a qualifying child if (a) a divorce decree specifies either that the noncustodial parent shall be entitled to that exemption or that the custodial parent will sign Form 8332, as Solomon wrote. The second one: Did Isovegas maintain a home for a qualifying relative? I would say "yes". For half of the year? It depends. I'm still refuse to considerer the divorce decree as one of the Ten Commandments. If his ex wife, for instance, got sick, or went on vacation alone with a new demanding boyfriend during a month,and let him to take care of the kids , Voila!! He will satisfied the H of Household requirement. Am I right?

In the case of shared custody arrangements, the Tax Court adds up the number of days of actual physical custody, and the parent with the greater number of days is entitled to the Head of Household filing status. The spouses may not stipulate in the divorce instrument that each spouse will claim Head of Household.

Possible solution to this problem. Arrange so that physical custody for one child is 4 days a week and physical custody for the other child is 3 days a week. Awkward, yes, but both parents would get HOH.

Sorry for telling this Taxref- Sorry about that , IRS- please. Don't prosecute me for that. In spanish there is a saying- It should an english version: The theory is grey,The realworld is multicolored Mon and Dad are not going to keep any record- Nobody is acting in that way. I hope you are kidding Jdugancpa Or, if they keep that records, April 15 would get them fighting eachother about that subject.

What I am suggesting is that the parties change the custody arrangement for one child only so that Isovegas has custody for that one child for 4 days per week. This may be more trouble than its worth, and it may upset the children; consequently, this alternative may not be feasible.

In the other thread about wanting a CPA to certify your Sch. C, you stated that your wife was mad because "the gravy train" was leaving. Now in this thread she makes more money than you do.

I am amazed at the payment you say you owe when she makes more money than you do and you will have the children 43% of the time (3/7). I ran basic numbers through a California support calculator. If you made $10,000 per month with no itemized deductions and she made $10,001 per month with no itemized deductions, she would OWE YOU ~$300 per month for child support (CS) even though she has the children 57% of the time (4/7). This is because she would have three deductions (herself + the 2 kids) and have HOH status while you would have only yourself as a deduction and single status. For you to owe her $1,100 per month, the previous assumptions would have to stand except you would have to have $7,000 per month of itemized deductions. Not likely.

I looked up the Nevada child support guidelines and, indeed, the implication is that it doesn't matter what the custodial parent (CP) makes - the child support is based on what the non-custodial parent (NCP) makes. However, the code section does not list any other factors, (e.g., % of time with NCP; income differential between NCP and CP, itemized deductions of NCP and CP, etc.) So I assume there must be other factors listed elsewhere, otherwise the code implies that a CP making $100,000 per month would get child support from a NCP making $5,000 per month. And that would just be wrong.

So, since you have failed to get a CPA and have failed to get an attorney and now have a court date set for Tuesday you have a few options:

1) Keep doing what you are doing. The result will likely be not what you think is fair and you will have a growing resentment over time. That is not good for your children and that is what you should be focusing on - the best interests of your children. You can still focus on your financial issues, but don't lose sight of the kids.

2) Get an attorney who can possibly get the court date extended. Take a breath and find out from a professional what your options are and what the likely outcomes are for your REAL income level and your wife's REAL income level. Retired judges as financial mediators are quite common, but quite possibly the reasoning behind the amount of the child support payment was not adequately explained to you. The result may still not be what you want, but perhaps you will understand it better and will not have a growing resentment toward your wife that will spill over to the children.

3) If the attorney is not fully versed in the tax issues, he/she probably has a CPA he refers business to - use him/her. Paying money upfront now will possibly save you much more than that over the period CS payments are due.

And I want to reiterate something I have already said twice in this post - keep your eyes and heart on the best interests of the children. I don't care how negative your spouse may or may not be during this time or going forward. Be HONEST and conduct yourself in such a manner that you can look at yourself in the mirror and your children can be proud of their father. In your children's eyes you will be denigrating half of who they are if you denigrate their mother or treat her with disrespect. It does not matter if your wife denigrates you. If you hold yourself to a better standard, your children will see it and understand it - if not now, in the future.

That being said, you can still watch out for the children at the same time you are watching out for your financial interests in an HONEST manner.

I did not realize that Isovegas was the author of the other thread. To Jake: Yes, H of H is the best way to file a federal income tax return.. and taxpayers know that. For that reason, I never explain the rules to my client during the interview. If I say: "To be H of H you need this and that... Then, the taxpayers could adjust his personal situation to be elegible for the higher standard deduction. I ask questions: For how long was your family member living with you during last year. If ,he said, for instances: 10 month, 12 month, or whatever... I repect the answer ; 10 month??? If , I notice a hesitation , I ask : "Are you sure about the 10 month? Some companies make client sign a flow chart that bring the status, I don't think that is necesary.. BYE

Forgive the comment on the other thread. You actually do know what you are talking about.

And yes, the parent making 5000 per month will have to pay the primary physical custodian making 10,000 per month. Not a fair system, but it is what it is.