Divorce and Taxes Part II – Child Support, Alimony, and Taxes

The certainties of death and taxes are inescapable, as is the certainty that divorce will change your tax situation. If you’re getting divorced, you may need to think about child support, alimony, and taxes – along with other tax issues.

In this series we look at some of the key issues surrounding divorce and taxes, so you can gain the clarity you need to have informed conversations with your attorney and your CPA. That can be important to help them protect your interests.

Last time in the series, we discussed four things to consider when mediating or negotiating your divorce decree. When it comes to our topic for this installment – child support, alimony, and taxes – you may find some surprises.

Child support and taxes 

If you receive child support, you don’t have to report it as income.

If you pay child support, you don’t get to deduct it on your taxes… and you don’t get to claim the child on your taxes just because you pay support. The parent who gets to take the dependency exemption for the child depends upon your Divorce Decree, temporary order, and/or the tax code.

Alimony and taxes – a different animal

Alimony (spousal support) is altogether different than child support when it comes to tax rules. If you receive alimony, you have to report it on your taxes as income. If you pay alimony, your spousal support payments are tax deductible.

Getting slick with spousal support and taxes – a sticking point for the IRS

If your decree structures alimony payments to be high in the first couple of years and then drop off, the IRS may consider those payments to be a property settlement rather than alimony and you may not be able to deduct them.

Know your decree

Be mindful of child and spousal support tax implications when you’re negotiating or mediating your decree – including who will claim exemptions for the children.

 

A word about backsies

If you reach an agreement and a temporary order or final decree is entered, but your spouse changes their mind later, you may want to file your taxes before your spouse. That is unless you need them to sign IRS Form 8332 and they refuse. If that happens, talk to an experienced attorney about enforcement options as soon as you can.

If you don’t need your spouse to sign Form 8332, and they tell you they’re taking the dependency exemption when they aren’t entitled, you may come out ahead if you file first because the IRS will credit the first person who files and claims the exemption.

For more on filing child support and taxes and alimony and taxes, see IRS publication 504.

Next in the series

Next time in the series we look at things to think about when negotiating the property settlement agreement in your divorce.

 

This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts. 


Author, Hightower Reff  Partner Attorney Tracy Hightower, holds both a Juris Doctor and  a Master of Laws in Taxation. For more about Tracy, visit her profile page.

If you need help with an Omaha area divorce or other Omaha family law case, contact Hightower Reff Law today and come visit with one of the attorneys at the Omaha office. 

Changing Child Custody or Support Your Holiday Wish? 4 Things You Should Know (Infographic)

holiday-modification-mediumFrustrations over repeated problems can be a bigger deal during the holidays. That can be a pain, but it can also be a benefit in the long run because it can make clear to you things that need to change. Sometimes those things include child custody or child support orders that aren’t working for your family anymore. If changing child custody or support is your holiday wish, there are 4 things you should know:

 

In a Nebraska child support modification, if a parent is looking to reduce the child support they owe because their income has gone down, the court will look at what caused their income decrease. The court will also look at whether the parent caused it on purpose.

Unfitness not a necessity for changing child custody

You don’t have to prove that the other parent is unfit for the judge to grant a custody modification. Showing that changing child custody is in the child’s best interests may get the job done. For example, the court may find that changing child custody is in the child’s best interests if the parent with primary custody is no longer giving the child a stable living environment.

The court’s decision will turn on the very specific, individual facts of your case, and the needs of your children. Your attorney’s skill in clearly and effectively showing the court those things is critical.

Experienced legal support is essential

Choosing the right attorney for a Nebraska child custody modification or Nebraska child support modification is crucial. It’s also crucial to your peace of mind during what can be a long court proceeding. Having an attorney in your corner you are confident in, who gives you clear information and who is committed to your case is key.

Also remember that experience goes a long way. When you choose your attorney for your child custody modification case or child support modification case, look for a lawyer who works daily in this specialized area of the law.

Look also for a lawyer who’s familiar with the judges in your area, and how they may view the facts of your case. While no attorney has a crystal ball, or can guarantee the outcome of a case, familiarity with “the bench” in the county where your case will be heard can help your attorney know how to approach your case in the most effective way.

 

This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts. 


For details about the author, Hightower Reff  Partner Attorney Susan Reff, visit her profile page.

Find out more about how Hightower Reff can help with custody and support modification. 

If you need help with a child custody modification case, or a support modification case, contact Hightower Reff Law todayand come visit with one of the attorneys at the Omaha office. 

Need to Change a Nebraska Custody or Child Support Order? 4 Things You Need to Know

4thingsaboutmodificationhrlawAt Hightower Reff Law in Omaha, Nebraska, we often meet with clients who come in confused about what to do when their parenting plan isn’t working for them anymore and they need to change a Nebraska child custody order or change a Nebraska child support order.

Sometimes when a child support or child custody decree that was entered in the past doesn’t work anymore, there is something you can do about it. In some cases, you can change or modify custody. It’s called — simply enough — a modification case.

1.  No Magic…but Some Musts 

There’s really no magic number of months or years to wait to try a change a Nebraska child custody order. However, to convince a court to modify a domestic relations order, your case has to meet some basic criteria:

  • The child domestic relations order has to be a final order (temporary orders can’t be modified)
  • There  material change in circumstances that:
  • happened after the entry of the original decree or any previous modification, and
  • was not contemplated when the decree or last order of modification was entered
  • If it’s an order of child support, Nebraska law considers a material change in financial circumstances to be:
    • One that results in a change of 10 percent or more, but not less than $25, upward or downward, of the current child support obligation, child care obligation, or health care obligation

and

2. The Why’s Matter 

If the parent’s income is lower when the original order was entered, the court will look at the reason for the reduction and whether it was in bad faith if the parent did it on purpose in a Nebraska child custody modification case. The biggest consideration, however, is best interests of the child.

In addition to financial issues, the court will also consider other circumstances of the parties or the child – like  health –  when it’s as a material change in circumstances for modifying Nebraska child support.

3. Other Orders/Issues that may be Able to be Modified:

  • parenting time
  • spousal support
  • removal of the child from the jurisdiction if a parent wants to relocate with the child

4. Orders From Elsewhere 

If  a court in another state entered the Nebraska child support order in question, you may be able to modify it in Nebraska.

That’s a question of jurisdiction that will need to be addressed after an in-depth consultation with an experienced attorney, like those at Hightower Reff Law, because whether you are likely to be successful in your attempt to change your Nebraska child support or child custody order can change in your based upon small changes in fact.

This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts. 


For details about the author, Hightower Reff  Attorney Scott Hahn, visit his profile page at our main website.

To learn about Hightower Reff’s Family Law Practice, visit our main website.

What to Expect from Your Lawyer – Five Key Reasons You Need to Pick your Battles in Court

shutterstock_268621781-thumb-400x267-65274Lawyers can seem like they’re from a foreign land with their own strange customs and language. And, let’s face it, sometimes (okay, a lot of times) some lawyers seem unapproachable, which can make the client experience less than a good one.

At Hightower Reff, we do our best to be approachable, talk like real people and have a productive relationship with our clients. However, like many lawyers, despite our best efforts to do this, we sometimes fall short of our clients’ expectations.

In this series, What to Expect from Your Lawyer, Hightower Reff Partner Attorney Susan Reff will give you some useful information to help you understand why your lawyer handles things the way they do and to maintain reasonable expectations regarding your attorney. 

This week: five of the most important reasons to pick your battles when you are involved in a court case.

Focusing Expectations & Picking Battles

Picking battles is important to help you focus your expectations and develop your strategy for your case. Each court case is made up issues to be decided. In criminal cases those issues, in large part, involve proof as to whether or not the defendant did what he or she is accused of doing. In civil cases – like divorce and child custody – the issues involve who is entitled to what property, and who should have what time and decision making power with the children. 

Sometimes an entire case can rise or fall on one issue, especially in criminal law, and your biggest (and perhaps only) battle choice may be whether or not to enter a plea agreement. Sometimes, however, you have more choices to make regarding your battles and focusing your expectations. This is especially true in family law. 

When your lawyer advises you to back off on an issue, there is a reason. Here are five of the key reasons to listen to that advice, focus your expectations and pick your battles:

1. You Don’t Want to Spend the Rest of your Life (or what feels like it) in Court

Even when the two sides aren’t fighting over every little thing, court cases take a long time. Every issue you choose to fight about adds weeks or months onto the clock. 

First, the lawyers will go back and forth trying to reach an agreement, then, they may have to file motions or other papers with the court about that specific issue asking the judge to decide. Depending on the issue, there may be a special hearing, or it may be dealt with at trial. Either way, chances are it will add time onto your case. 

In some cases, like criminal cases where your freedom is on the line, and your attorney believes the law is on your side, it may be worth all the time in the world to fight nearly every issue. However, in other cases – including divorce and child custody – you should weigh the time it will take to fight over the issue against the likely outcome and ask yourself if the battle is worth it. 

An experienced attorney can advise you regarding your chances of success if you fight a certain issue in your case, and how much time it is likely to take. With that information, you are better equipped to decide if your time investment is worth the likely return.  

2. Other Things are More Important   

Before you decide to fight a battle over an issue in your case, decide your intentions and priorities and make sure winning that issue is in line with them. In other words, focus on what’s important to you.

If you choose to prioritize one issue in your case, and you are successful, it may be at the expense of something else. This is especially true in family law. The court is going to try to make things “equitable,” so issues left up to the court are likely to go a little your way, and a little not your way. 

For example, when it comes to a divorce property settlement, it may mean that you get the boat, but you don’t get the savings account with a value comparable to the boat. Maybe that’s fine with you because you really like boating. But, if you go after the boat just to keep your spouse from having it, and you really need the money instead, you could end up cutting off your nose to spite your face. 

In child custody issues, relationships are usually the most important consideration. First, you should consider how any issue at hand may affect your child’s relationship with the other parent and/or with you. Next, consider how the issue will affect your relationship with the other parent and – as a result – your ability to effectively co-parent your child. If the impact of fighting about an issue on any of these areas will be worse than if you reach a compromise, don’t fight. Work it out. Even if it means giving a little more than you really want. In the end, the return on your investment of sacrifice is likely to pay off.  

3. There are Long Term Consequences  

Decisions you make in your case – especially in family law – could affect you, your spouse, and children for many years.

As an example, in a divorce, you may really want your ex’s mother’s casserole dish. Maybe you really love it, because you loved your mother-in-law & she has passed, so you just want this one reminder of her… or maybe you know your spouse really wants it, so you want to take it to spite them. Either way, decide whether the casserole dish is worth it in the scheme of life.  

In twenty years, is it going to have been worth your time fighting over a piece of bakeware? Probably not. Perhaps the long term consequences will result in damage to your integrity and your ability to remain amicable with you spouse. Those things could render the battle a lost cause – regardless of how it turns out.  

The consideration of long term consequences is especially important when children are involved in a divorce. 

4. Your Money Tree Died

You may have heard the saying that all problems have a solution so long as you have the time and money to find it and make it happen. In other words, time and money are fuel to reach a goal. The same can be said in many court cases. 

Along with costing time, court cases cost money. In most of them, your lawyer charges by the hour. That means every additional battle adds to the bill. Unless your money fuel tank is unlimited, you are going to have to decide where you want to focus your money fuel. If you spend it all fighting over things like casserole dishes, you will soon find you don’t have any left for the issues in your case that are truly impactful in your life and your child’s. Put your money fuel where it counts. 

5. Your Case is About the Law – Not Principals

Very rarely (perhaps almost never) is a court case about principals. Rather, court cases are about the law. When people involved in a court case talk about principals, they are talking about what they feel or believe is “fair” or what they deserve. They are talking about emotions. However, what you feel or believe you deserve isn’t relevant in court. The law is only thing that is relevant. 

If your lawyer is being honest, they will tell you the same. It’s your lawyer’s job to guide your expectations accordingly. That means focusing on the law, not your emotions. 

For example, if you enter your divorce with the goal of taking your spouse to the cleaners because he or she was unfaithful or was a poor excuse for a spouse – “out of the principal of the matter” – you are going to end up disappointed. 

The court does not care whether your ex is an ass. The court can only concern itself with enforcing the law. In most aspects of divorce, and even child custody, being an ass does not mean you are entitled to less money, property, or time with your child. Further, your spouse getting less of any of these things is not going to change a thing about your spouse or what happened between you.

Don’t Make Your Battle Plan Alone 

There is no substitute for the advice of an experienced attorney to help you pick your battles.  Hightower Reff can help. Call us at 402-932-9550, or contact us online.

Next Time…

Watch for Part III of our series when we explore ways you can help control your legal fees.   

This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts.  

What to Expect from Your Lawyer – Top Five Things to Know About Phone Calls

shutterstock_155858537-thumb-500x334-65280Lawyers can seem like they’re from a foreign land with their own strange customs and language. And, let’s face it, sometimes (okay, a lot of times) some lawyers seem unapproachable, which can make the client experience less than a good one.

At Hightower Reff, we do our best to be approachable, talk like real people and have a productive relationship with our clients. However, like many lawyers, despite our best efforts to do this, we sometimes fall short of our clients’ expectations.

In this series, What to Expect from Your Lawyer, Hightower Reff Partner Attorney Susan Reff will give you some useful information to help you understand why your lawyer handles things the way they do and to maintain reasonable expectations regarding your attorney.

This week: Top five things to know about phone calls.

1. Call Me, Maybe? – Or Maybe Your Lawyer is a Jerk

One of the most common complaints about lawyers is that it may seem they take forever to return calls or don’t return them at all.

Despite the appearance, most of us really do get that timely return calls are important to the client. I say most of us, because – as with any profession – there are a few bad lawyers out there. Either they are bad at managing their case load, have personal problems or they are just jerks. However, other than those exceptions, we attorneys do our very best to make our clients happy with all aspects of our communications with them – including phone calls.

But there are several reasons you may not get a timely return call or talk directly with your attorney at all. Understanding why and keeping reasonable expectations can be helpful to a good client experience.

2. It’s Usually About Time

Good lawyers attract a lot of clients. Lawyers with a lot of clients are always pressed for time. That’s why they typically rely on trusted staff to help manage their cases and communicate with clients. Support staff can answer routine questions, field calls and follow up with the lawyer on any questions the lawyer needs to answer. This frees your lawyer up to do things that only they can do like planning your legal strategy, attending hearings, solving emergencies and negotiating with opposing counsel.

In other words, your lawyer has to prioritize his or her time to do their job well. That doesn’t mean you aren’t important. In fact, it means you’re so important, they want to be sure they can devote the necessary time to your case when your case demands it. They need to do the same for their other clients as well.

As a result — unless you’re in the middle of a complex issue, crisis or negotiation in your case, preparing for a hearing or trial that is happening soon or in the throes of another legally dire aspect of your case — it’s reasonable that your attorney may enlist the support of another lawyer in the firm, a paralegal or assistant to take care of your call.

3. It’s Privileged  

In some circumstances, a lawyer actually can’t call a person back because of attorney client privilege, such as when the caller isn’t the client. This commonly happens when someone other than the client is paying the lawyer’s bill.

For example, if you hire a lawyer to represent your son in his divorce, the lawyer can’t talk to you about the case unless your son signs a release.

In some circumstances – like criminal cases – the lawyer may not talk to you even if a release has been signed. This is because sharing details of the case with anyone but the client may mean that information is no longer privileged and could be used against the client. You could be called by the other side to testify about what the attorney told you.

4. The World’s Most Expensive Pay Phone

Before you pick up the phone to call your lawyer – remember that each time you call, you are going to incur a charge on your bill. Sometimes calling your attorney can seem like the world’s most expensive pay phone.

Unless it’s something urgent or time sensitive, ask yourself if the question can wait until the next time they call you, or until you have more than one question. We recommend our clients make a list of these “little” questions that are bound pop up and ask them all at once.

If you are a person who needs regular reassuring from your attorney personally, if your attorney is willing and able, you may want to schedule a weekly phone call with them when you are in the active phases of your case. That way, you can have peace of mind by touching base at least once a week, and have your “little question list” ready to go for the weekly call.

5. Sometimes It’s Not a Good Fit 

There are many legitimate reasons a lawyer may take a long time to return your call or not call back at all. But like with any personal service, sometimes what the lawyer is willing or able to do and what you want does not mesh. It may just not be a good fit. If that is the case, it’s best to figure it out early and find a better fit.

A good attorney who is the right fit for you is crucial, and Hightower Reff can help. Call us at 402-932-9550, or contact us online.

Next Time…

Watch for Part II of our series: Why You Need to Pick Your Battles. 

This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts.