Buying a House?

I bet you're wondering, "What does me buying a house have to do with anything?" Well, we wondered the same thing once upon a time. So before we bought our house during my (now) husband's long, drawn out divorce, he asked his attorney how it might affect things, if at all.

She, of course, didn't respond.

After we bought our house, his ex started crying about him including his mortgage interest on his income and expense report. We wondered what this was all about, so we again asked his attorney. That's when we were told that buying a house DOES affect your support payments! How? By increasing them, of course!!!

Yes, that's right. Your mortgage interest is used in the Dissomaster calculation to calculate your support payments because, even though you're spending more money each month now that you have a mortgage payment, you're able to claim your mortgage interest on your tax return, which means that you could get a larger refund from the IRS each year. (No guarantee, of course...we ended up OWING money that first year, and yet his support payments increased regardless!)

So while you're decreasing your available cash each month, you MAY be getting an increased refund from the IRS each year (income). Of course, your refund certainly won't be equal to your increased monthly expenses, but the court doesn't care about that...your refund is additional income as far as they're concerned. So buying a house means you'll now have even less available cash because your newfound wealth (that annual tax refund) is going to make your spousal and/or child support payments go up!

I know...it's bullshit, to be sure! But it is what it is...and it sucks!

Tax Exemptions for Children: Sample Language

Be sure that your court order stipulates which parent will claim the child(ren) on his or her tax return. Some parents alternate years, so that the father claims the child one year and the mother the next. My husband has two minor children; he claims one child and the devil claims the other, so his order is written like this:

"TAX EXEMPTIONS FOR CHILDREN
20. Each party shall be permitted to claim one of the children on his or her income tax returns each year, with Petitioner ["the devil"] claiming Child 2* and Respondent claiming Child 1.* By January 31st of each year until Child 1* reaches the age of majority, Petitioner shall provide to Respondent a completed and signed Form 8332 – Release of Claim to Exemption for Child of Divorced or Separated Parents. By January 31st of each year until Child 2* reaches the age of majority, Respondent shall provide to Petitioner a completed and signed Form 8332 – Release of Claim to Exemption for Child of Divorced or Separated Parents."

*Your child(ren)'s name would be substituted for "Child 1" and "Child 2."

Form 8332 - Release of Claim to Exemption for Child of Divorced or Separated Parents is required for a parent with less than 50% custody to be able to claim the child on his or her tax return. You can download the form from the IRS website (http://www.irs.gov/pub/irs-pdf/f8332.pdf). You should also visit http://www.irs.gov/ to learn more about claiming a child who is a dependent of parents who are divorced, legally separated, separated under a written separation agreement, or who lived apart at all times during the last 6 months of the calendar year.

*IMPORTANT*: You won't be allowed to deduct your work-related childcare expense if your tax return doesn't reflect that your child lived with you all year. The IRS's reasoning is that if the child doesn't live with you, then you don't need childcare to be able to work. This, of course, if flawed thinking because many non-custodial parents are court ordered to share in the cost of work-related childcare. But the law is what it is.