Tax Case: Failure to File Form May Subvert Divorce Agreement Regarding Child Tax Deduction

In many Texas divorces and Texas Suits Affecting the Parent-Child Relationship, an agreement is made between the parties regarding which party will have the right to claim a child as a dependent for tax deduction purposes. To make this agreement enforceable, the parties should execute an IRS form 8332. This form allocates the tax dependency in one or more years regardless of who would normally be able to take the deduction. A recent U.S. Tax Court case shows that failure to file this IRS form with your taxes may mean the IRS will deny the deduction even if you have an agreement with your former spouse.

In Chamberlain v. Commissioner, the U.S. Tax Court ruled that the former husband (taxpayer) was not entitled to the dependent deduction for one of his children because he didn't attach a valid IRS Form 8332 (Release of Claim to Exemption for Child of Divorced or Separated Parents) to his 2003 Federal tax return (the child credit was also denied because it is premised on being entitled to the dependent deduction for the child). The Tax Court concluded that the attachment of a Post-It note referencing the initial (1995) Form 8332 didn't satisfy the statutory requirement of attaching a valid written declaration.

The taxpayer's former wife executed a Form 8332 in which she relinquished the dependency deduction for one of their two children beginning in 1995 and for all future years. The taxpayer claimed that he attached the original Form 8332 to his 1995 return, but that a subsequent fire destroyed all of his copies. The IRS was unable to provide a copy because their 1995 tax return information had been destroyed (pursuant to IRS document destruction policies).

This result may seem harsh, but as the Court indicated, "Although we are sympathetic with [taxpayer's] plight, we are bound by the wording of the statute as enacted and accompanying regulations when consistent therewith. "

Source: Family Law Taxation

Separation and Child Custody in Texas Divorce Cases

In Texas divorce cases where there may be a custody battle, the parties need to be very cautious about moving out of the marital home.

Moving out of the family home without your children, even if temporarily, puts your chances of getting primary conservatorship at risk. This is because few Texas judges want to uproot children and move them to a different location if it can be avoided.

Parties should make formal arrangments with their spouses about what conditions for access and possession will be granted. Normally in Texas divorce cases, this means entering temporary orders with the Court prior to moving from the home.

Texas Child Support Amount Increased By New Law

The Texas Family Code sets a cap on amount of income the courts can base child support amounts on. For many years, the cap was set at $6,000 of the child support payer's net income. Beyond this amount, the person seeking child support had to prove that the child or children had special needs to justify a higher support amount.

Governor Perry recently signed House Bill 448 into law and raised the cap on net resources subject to the child support formula from $6,000 of monthly net resources to $7,500 of monthly net resources.

The act also ensures that increases for inflation will occur automatically. The law provides that the maximum dollar amount will be adjusted for inflation every six years. The Title IV-D agency shall compute the adjusted amount based on the percentage change during the preceding six-year period in the consumer price index, as rounded to the nearest $50 increment, and publish the adjusted amount in the Texas Register before September 1 of the year in which the adjustment takes effect.

The act also includes language with regard to taking expenses for health insurance coverage for the obligor's child into account in determining child support. If the obligor has more than one child covered under the same health insurance coverage, the court is directed to divide the total cost to the obligor for the insurance by the total number of minor dependents, including the child, covered under the plan.

HB 448 can be viewed at 80(R) HB 448 - Enrolled version - Bill Text

Psychological Evaluations in Texas Child Custody Cases

Occasionally, the Texas family law attorney will need to consider the use of psychological testing and assessment in child custody cases.

One of the first things a Texas family law attorney must do in reviewing a psychological test is to consider the credentials of the tester. Although many other persons may involve themselves in assessment type activity (counselors, therapists, gurus), by law the only people who can call what they do "psychological testing" are licensed psychologists and psychiatrists.

There are five primary sources of authority for psychological testing in Texas custody cases. these are:

(1) Ethical Principals of Psychologists and Code of Conduct;

(2) Standards for Educational and Psychological Testing;

(3) Specialty Guidelines for Forensic Psychologists;

(4) Guidelines for Child Custody Evaluations in Divorce Proceedings;

(5) Rights and Responsibilities of Test Takers: Guidelines and Expectations.

A Texas family law attorney should review the extent to which the psychologist followed these sources.

Recently there have been more and more criticisms of the use of psychological testing. Faced with increased use of Daubert challenges, the courts have begun to limit or even bar psychological testimony. Some judges even routinely deny any request for child custody evaluations being done in the first place. However, this Daubert age backlash to the former judicial practice of blindly following the recommendations of mental health professionals pushes the pendulum too far in the other direction. Psychological tests are still completely valid and useful in Texas custody evaluations as long as they are used contextually.