Nolo’s Divorce, Custody & Family Law Blog

Until now, divorced parents had to negotiate about who got to take the I.R.S. dependent exemption for each of their children. In general, the primary custodial parent has been entitled to the dependent exemption because the child usually lives with that parent more than 50% of the time. But often the non-custodial parent is the higher wage-earner and would benefit more from the exemption, so the I.R.S. would allow the custodial parent to sign a waiver allowing the non-custodial parent to take the exemption instead.

This is still the general rule for dependent exemption purposes, but it's no longer an either/or proposition for all purposes under a recently issued IRS Revenue Procedure. (There's also a very clear explanation of the new guidance on the McGuire Woods website.) Now, the IRS will treat a child as a dependent of both parents for purposes of tax treatment of Medical Savings Accounts (MSA) and Health Savings Accounts (HSA), as well as certain other fringe benefits of employment. For federal income tax purposes, both parents can now treat their children as dependents even if no waiver has been signed by the custodial parent, meaning that both can exclude from their gross income any money taken from an MSA or HSA and used for qualifying medical expenses.

This may seem quite technical, but for parents who use MSAs and HSAs, it's good news. Both parents can benefit from treating the child as a dependent, and they no longer need to negotiate (or argue) about who gets that tax benefit.

There are over a million active duty service members in the U.S. Armed Forces today, many serving in high-stress areas like Iraq and Afghanistan. Perhaps surprisingly, the rate of divorce generally among service members is comparable to that in the general population (although there was a sharp increase between 2001 and 2004, a period when deployments increased significantly). But within the military, women divorce at nearly twice the rate of men. There's lots of speculation about why in this article at Divorce360.com, but no solid answers.

Numbers aside, the reality is that divorce raises special issues for military spouses in almost every aspect of the divorce process, including calculating support, dividing property, establishing a parenting plan, and dealing with retirement and insurance benefits. The Armed Services Legal Assistance Office provides some help for military families going through divorce, and there are websites that offer free legal information as well. Also check out Nolo's Essential Guide to Divorce -- the updated 2nd Edition has a new chapter on military divorce.

Every state has its own guidelines for child support--when parents separate, they use each parent's income and the amount of time they spend with the children to calculate how much support should be paid. But is there such a thing as an income too high to measure child support obligations? Billionaire Donald Bren thinks there is. The Los Angeles Times reports that Bren refuses to disclose his income or other financial information. His two children say that under California guidelines, support should be approximately $2.2 million each. The rules base child support on the parents' income in order for the children to share the same standard of living as their wealthier parent. Bren says the court should determine the amount that would accomplish that, and he'll pay it, and thus it's not necessary to give the court financial information.

The fact is, state child support guidelines aren't designed for the super-wealthy, but for regular people. At the same time, rules are rules, and unless Mr. Bren can show a good reason why his financial information should be protected, the court's likely to decide he should make the same disclosures that everyone else is required to make. If he wants to get a ballpark of what he might be required to pay, he can use one of the free child support calculators available on the Web.

Behind on child support? Don't expect to leave the country until you've paid up. New passport rules mean good news for the kids who are owed the approximately $96 billion in court-ordered child support that goes unpaid every year in the United States. The Passport Denial Program keeps parents who are behind on child support grounded in the U.S. by denying them new or renewal passports.

As Kevin Freking reports in the Seattle Times, two changes in passport rules are increasing collections of unpaid child support. First, the threshold for collection actions went down from $5,000 to $2,500, which increased the number of cases submitted to the program by 400,000. But more significant were the rule changes that require air travelers to and from Mexico, Canada, the Caribbean, and South America to have passports.

By a conservative estimate, the Passport Denial Program has collected at least $22.5 million so far this year. It took all of 2006 to collect that much under the old passport requirements. Cool, right? Still, it doesn't take a math whiz to see that $22.5 million is not much when nearly $100 billion is outstanding. And in addition to the hardship they cause their children, deadbeat parents cost the federal and state governments $1 for every $4.50 collected.

Child support is not a joke--and unpaid child support is a huge problem. If you owe support and you really can't pay it because you've lost your job or suffered an illness, go to court right away and get the support amount reduced. Until you do, it will continue to accrue. Otherwise, pay up! Your kids need you. Need more info? Check your state's child support enforcement office.