Many people come to our office seeking parenting orders not only for parenting time and expenses for the children, but also with regard to who gets to take child tax exemptions each year. A common question we are asked is “Why does he/she get to take tax exemptions when he/she never sees the children?” Many people come to our office and do not understand why the other parent should be entitled to claim any exemptions if the children are not residing with that parent at least ½ of the time or in some cases simply at all. The bottom line, however, is that the other parent is entitled to claim exemptions because Colorado law provides them this right.
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I stop at this point and state that our Family Law Division attorneys are not tax attorneys or accountants. Our standard response to tax related questions is to advise our clients to go seek the assistance of a tax attorney or accountant. However, we can tell you that Colorado law provides the sharing of tax exemptions for parents who share the financial burden of raising children. Sharing does not mean equally sharing the total financial burden that comes with raising children. Colorado law states that if a party is paying court ordered child support, regardless of whether or not they are exercising any parenting time or contributing to other costs for the child, the paying parent is entitled to their proportional share of the child tax exemptions. For example, if Mother makes $150,000 per year and Father makes $75,000 per year, Mother will be entitled to approximately 67% percent of the tax exemptions and Father may be entitled to take 33%. Typically this equates into a schedule where, in an example with two children, Mother might take the tax exemption for two years and Father might take the tax exemptions in the third year. There are a variety of ways to structure the exemptions and it is important it is clear in any Agreement or Order of the Court as to who is taking which exemption each year.
As with many things there is an exception. The exception to this rule is when the parent ordered to pay child support fails to make their child support payments. If at the end of the year a party is behind on child support, the party paying child support forfeits any dependency exemptions they may be entitled to that tax year and the other party is entitled to take all available exemptions. The forfeiting party is not entitled to any “make up” exemptions in future years.
The Gasper Law Group can assist you in structuring the tax exemptions in order to avoid unnecessary conflict in the future when two parents realize their Agreement for tax exemptions lacks any structure or specificity.