Category: Child Support

Will mortgage lenders count child support and alimony?  The simple answer is “that depends”  Qualification for mortgages in Maryland is more strict than it has been in the past. Your Annapolis, Maryland lawyer will work with you to develop a schedule of payments to assist you whether you are refinancing the mortgage on the family home to “buy out” your spouse or purchasing a new home.

Do alimony and child support count as income when lenders are deciding whether you qualify for a particular amount of mortgage?   These issues should be discussed with your Annapolis, Maryland attorney when you are negotiating a separation agreement or preparing for trial.

1. In general, you have to have a signed separation agreement or an order from the court.

2. The obligation has to be payable for three years beyond when you apply for the mortgage.

3. And, you have to be able to prove a year’s history of the support actually being paid.

This means there are several considerations you need to discuss with your Annapolis, Maryland attorney at the time of negotiating the separation agreement or going to court.  I

If you have to be able to prove the payments were made for 12 consecutive months, you need to be sure to copy all pre-separation agreement checks.  If there have not been regular payments made, a lender may require you to receive payments for 12 months so you can establish a record of payments — but you are required to also have three years in the future.  If you are fearful about your spouse actually making the payments, an earnings withholding order may ensure payment.    So, you have to be sure that the length of the child support and alimony payments are long enough to both prove a history of payment and extend three years into the future.

Of course, if you qualify for the loan without and alimony and child support, this would have no effect on you.

When we think of taxes on children we immediately think of the tax exemption for children.  The tax considerations are greater than simply who gets the exemptions. There are a number of other expenses which also go with the children.  In order to determine what law applies to you, you need some professional guidance.

The tax exemption for the children is not decided based on what payments a parent makes for a child. It does not depend upon who pays the most for the child.  It does not depend upon the payment of child support.   Rather, it depends upon where a child lives and for how long.

If one parent has sole physical child custody that person gets the federal and state exemption unless they have agreed or court orders to the contrary. But it is not all that simple.  If the parents have the children 50/50, then the exemption goes to the parent with the higher adjusted gross income.

There are also other tax deductions and adjustments that may result in saved tax dollars.

Some tax benefits go to the parent with custody of the child. An example is the head of the household filing status. Head-of-the-household status results in a different and lower tax rate than filing as a single taxpayer.  In order to be eligible to file as head of household, the person claiming that filing status must have custody of a minor child.

The child and dependent care deduction also belong to the custodial parent.

Some credits do not depend upon physical custody.  They depend upon who claims the child exemption.  Even a non-custodial parent may be eligible to claim child tax credits and education credits.

As you can see, these issues are not simple and require your careful consultation with your Maryland family law attorney your tax advisor. Using all of the tax benefits that are allowed by the Internal Revenue Service and the State of Maryland can result in significant tax savings.   In order to determine what tax law applies to your particular situation, you need professional guidance.

Tax exemptions and deductions: We all want them, but sadly, not everyone is eligible for tax breaks. This is no different for parents who are sharing financial responsibilities for their kids after a divorce. When you are paying child support and attempting to calculate fair financial terms, tax information becomes more important than ever. The ever-present question for Maryland co-parents is simple but not always easy to answer. Who gets the exemption?

In most cases, the custodial parent is permitted to claim the dependents on their federal tax return, which means that person receives the deduction. Decades ago — when moms were almost always the primary custodian — such calculations were relatively simple. With the advent of new child custody-sharing strategies, however, the financial needs of the kids are often met by both parents to some extent.

By default, the person with whom the child spends the most nights is considered the custodial parent and receives the exemption. However, parents may enter into independent agreements to accommodate their payments for their children’s financial needs. Many parents trade off claiming the exemption, with mom taking the even years and dad taking the odd, for example. Those divorce court orders may be accepted by the Internal Revenue Service if simply attached to the tax return, though some recent divorcees may be required to file a special form.

It is important to remember that special tax laws also apply to those who pay Maryland child support. In many cases, such amounts may be eligible for certain considerations designed to limit the financial hardship on one or both parties. A family attorney in Maryland may be able to provide additional information about meeting the best interests of the child while still protecting your bank account at tax time.

Source: Huffington Post, “Children of Divorce: Who Gets the Tax Exemption?” Stann Givens, Mar. 13, 2014

Child support is due to children.  But, children suing parents for child support in Maryland law is unheard of according to Annapolis, Maryland family law attorneys.

A rebellious New Jersey teenager sued her parents for child support of $650.00 per week, private school tuition, and future college expenses.  According to the news reports, she would not obey her parents’ rules, and would not abide by their concerns about her boyfriend.  The teenager left home and moved in with her friend’s family. While the child claimed verbal and physical abuse, the judge did not refer to that in his opinion.

The Judge said the teenager was “spoiled” and denied her request.  He did schedule a later hearing on the request for college expenses.    She was also seeking over $12,000 in legal fees which had been paid for by the adults where she was living.

While data is not collected on lawsuits like this, an informal poll of Annapolis, Maryland family law attorneys leads us to believe that this has not occurred in Annapolis, Maryland.

Note that in Maryland a parent cannot legally be required to pay for a child’s college expenses (unless there is a written agreement between the parents).

There is an instance when children can sue parents:  in cases of physical or sexual abuse, a child has a cause of action against the abuser.

This “spoiled” child sounds rather like the affluenza defense which got a similarly indulged child off charges for killing four people drunk driving.

Have you spoken to your attorney about your Maryland and federal tax returns to know how to handle child support?   There are considerations that could result in thousands of dollars of deductions.

Besides just the exemptions for the children, there are other potentially valuable deductions and credits for children.  For example, are you entitled to the child care deduction, are you eligible for head of household filing or will the filing status impact the earned income tax credit?  Those are questions you need to consider.

Unlike what many people think, the payments are not tax deductible.  Neither are they income to the custodial parent.  The exemptions and deductions do not necessarily depend upon who has custody of the children and do not necessarily depend upon who is paying what for a child.

You should also be aware that under Maryland law, your income is one item that is used to calculate the support obligation for your family.  If you have mostly earnings for W-2 wages, there is nothing complex about the calculation.  But, if you are self-employed, there are many things that could have an impact on your bottom line figure.    The definition of gross income includes how the law treats various business expenses and whether the expenses are included or excluded from your income.  A family law attorney in Annapolis, Maryland can help you determine what part of your taxable income could be used to calculate the Maryland child support guidelines.

The Department of Human Resources, the embattled agency responsible for collecting child support in Maryland, is making significant progress toward fixing the problems identified in a recent audit. The department had been investigated by the Office of Legislative Audits, which questioned its ability to oversee the Child Support Enforcement Administration (CSEA). A 2011 report showed that the department had 15 serious deficiencies that were preventing it from maximizing its child support collection processes.

Now, the administration says it has remedied 11 of the violations and will fix the remaining four by the end of next month. The department had not been using all of its resources to recover overdue child support, but that seems to have changed since the remedies have been adopted. An aggressive collections campaign has resulted in record-high child support payments, according to local media outlets.

The department’s current leader took the helm in May 2011. A full audit of the system showed that the Child Support Enforcement Administration was plagued with shortcomings that were preventing the organization from recovering many overdue bills. Collectors were failing to seize money from parents’ bank accounts, for example, and they were also withholding insufficient wages in many cases. Some checks were also issued to deceased custodial parents; those checks were often fraudulently cashed.

To fix the problems, the new department leader created several database systems and reform initiatives. CSEA now has renegotiated contracts with collections agencies that are required to meet high performance expectations. Furthermore, the organization has established assistance programs to help noncustodial parents make their child support payments on time.

This is great news for the thousands of parents who depend on child support every year in the state of Maryland. The new system has yielded a $25 million increase over the previous year, setting a state record of $544 million in collected child support. Supporters are optimistic that the families who most need the funds are finally receiving help.

Source: The Daily Record, “Child support agency makes progress on reforms,” Llana Kowarski, March 6, 2013