It’s tax season again! So what do your taxes have to do with your family law case?
Child Support & Tax Interceptions
In Ohio, the Child Support Enforcement Agency has the authority to intercept a person’s tax refund for past due child support owed to any child (regardless of the child’s age). So, if you are the obligor and have an arrearage of $500 or more, your refund could be intercepted by the state to pay that child support arrearage. If your refund is worth the same or less than your arrearage, chances are good you will not receive any of your refund. If you are the parent receiving child support, you will not receive any notification that the other parent’s refund is being intercepted. However, assuming your case meets the state’s criteria, it will be automatically submitted for interception. Once the refund has been intercepted, processing and posting of the payment takes about 30-45 days (unless the money was intercepted from a joint return) before the arrears are paid.
Gross Income for Support vs. Gross Income for Taxes
What your gross income is for tax purposes is not the same as what is used for calculation of child support. (This is generally true with spousal support, too.) Ohio’s statutes for calculating child support are generally written to include more amounts. The statute that defines “gross income” for purposes of child support states that gross income means “the total of all earned and unearned income from all sources during a calendar year, whether or not the income is taxable.” There are even more specific definitions that follow this broad statement. There are even statutes that address how to calculate income for self-employed parents and what deductions are appropriate in determining a parent’s “gross income” for child support. Finally, if a parent is unemployed or underemployed, there is no guarantee that he or she will not be imputed income for purposes of child support. “Imputed income” is income the court or agency determines the parent would have earned if fully employed. The bottom line is that you cannot rely on the figure used in your tax return as the number at which child support should be calculated. Discuss this issue with your attorney for more specifics in your case.
Tax Refunds Are Marital Property
A big surprise to many divorcing couples is how tax refunds (or taxes owed) are dealt with by the court. Generally speaking, tax refunds are considered marital property and should be divided equally between the spouses. Sometimes, an argument can be made for a disproportionate allocation, but the court will presume that each spouse is entitled to one-half of the refund. It is usually best to prepare the taxes both jointly and separately and assess which will yield the best outcome and then split the refund. If one spouse unilaterally withholds the refund, he or she may be later required to pay back one-half of the refund to the other spouse.
As always, it’s best to seek the advice of your attorney before making any decisions relative to the above areas. Your case may require special analysis before any action is taken. If you are in need of a consultation in your divorce, custody, or support issues, contact our office at (614) 567-3031.