Dependent child exemption and support – Is it worth fight over?
Dependency exemptions
A dependent child exemption reduces a taxpayer’s adjusted gross income leaving more money in the taxpayers pocket by ensuring that not all of your income is taxed. In 2014, the value of a dependent child exemption is $3,950.00 per child. That is real money. It is no wonder that lawyers and client’s fight over who can claim the dependent child exemption for income tax purposes.
While the Internal Revenue Service has rules regarding claiming a dependent child exemption – See: http://www.irs.gov/pub/irs-pdf/f8332.pdf – Michigan courts can award a parent the dependent child exemption in a divorce, custody and support case even if it is contrary to the IRS rules.
Determining actual savings to the taxpayer of a dependent child exemption depends on the taxpayer’s marginal tax rate.
For example, if a taxpayer pays 30% in Federal income tax, the actual cash saved is 30% of $3,950.00 or $1,185.00 per dependent child exemption on their Federal return.
In addition, the marginal tax rate in Michigan is 4.25% for everyone so that adds another $167.00 per dependent child exemption to the savings.
As a general proposition, being awarded a dependent child exemption is a good thing and results in savings on your taxes. That is why many court’s order that parents share the dependent child exemption. If there is only one minor child alternating the exemption by years or splitting the dependent child exemption if there is more than one minor child.
However, a savvy lawyer should recalculate child support using the impact of the award of the dependent child exemption in a given tax year on child support. After all, the amount of money available to pay support impacts the support amount.
When calculating child support in a Michigan case the impact of the dependent child exemption should be taken into consideration. We can help.
We provide more information on Michigan divorce and Michigan Custody law than anyone.
Change is rarely easy, sometimes complicated and often emotional. Let a Michigan divorce attorney experienced in family law help you. We utilize a team approach to focus on solutions by applying Michigan law properly. We specialize in helping you focus on your goals, protect your property interests, manage your custody and support interest, and keep you happy in life’s most difficult circumstances.
Our commitment is to solve problems at an affordable cost. We love to settle cases, but are not afraid to fight.
About Findling Law
I have been exclusively practicing divorce and family law in Michigan for over two decades. The attorneys at Findling Law all share the core value of practicing law to help people navigate change in their lives, without compromising principles. We specialize in high socio-economic, high-profile and high-conflict cases, while also working with clients of all backgrounds. We recognize that the most important aspect of the practice of law is the application of the law to your specific circumstances.
That is why we provide more free information on divorce and family law than any other Michigan law firm. We want to help you manage your situation. Allow our exceptional legal team to help you navigate the change in your life, without compromising principles.
We want to help you manage your situation. Let our exceptional legal team help you . . .
Local: +1 (248) 399-3300 – toll free: (877-YOUR FIRM)
After hours emergency?: +1 (707) 968-7347
Or email me at: Daniel@Findlinglaw.com
By: Daniel Findling