Tax exemptions can be a contentious issue in custody cases. Washington child custody attorneys know that the allocation of tax exemptions can have a significant financial impact on the parties.
A recent Washington appeals court decision addressed a case in which the mother claimed the tax exemption for her younger child in two years despite the court’s order allocating the exemption to her former husband in those years. The order in effect at the time split the exemptions for the two children between the parents as long as the exemption existed for the older child. When there was no longer an exemption for the older child, the exemption for the younger child would alternate.
Under the order, the father had the right to the exemption in 2012, but both parties claimed it. Consequently, the father was audited and had to pay the IRS more than $2,000. He moved to have the mother held in contempt and asked the court to require the mother to sign a dependency exemption waiver for 2012 and 2014. The mother argued she claimed the exemption because the father had not paid his share of the child’s medical expenses.
A commissioner found the mother had intentionally violated the order, but she was not in contempt because the child needed the financial benefit of the exemption. The commissioner also found that the tax exemption provision in the order did not apply, since the child had turned 18. The parties participated in mediation at the commissioner’s request, but they failed to resolve the issue.
A commissioner ultimately granted the father’s motion for judgment on the tax exemption, ordering the mother to amend her returns for 2012 and 2014 to allow the father to claim the tax exemption. The father subsequently moved to enforce that order, stating he had not received anything about the tax returns from the mother. The mother claimed she did not have the money to amend the 2012 return. The mother and her husband were divorcing, and she claimed he refused to consent to amend their joint return for 2014 to remove the exemption. She made the same arguments at the hearing but signed forms to allow proper allocation of the exemptions.
The trial court found the mother in contempt, stating the father was entitled to judgment against her. The court entered judgment against the mother for interest on the amount the father paid to the IRS, for the tax refund he would have received in 2012, for the refund he did not get in 2014, and attorney fees.
The mother appealed, arguing the trial court did not have authority to allocate the 2014 tax exemption because the child turned 18 in 2014. The appeals court noted that the statute allowing courts to allocate the tax exemption did not limit that authority to minor children. Additionally, the allocation was made as part of the child support order, which stated the child support would continue as long as the child in question was in high school. The child was in high school until at least the summer of 2015. The appeals court found the trial court had the authority to allocate the tax exemption.
The mother also argued she should not have been held in contempt because she did not have the ability to comply with the order. Washington law allows a trial court to hold a party in contempt for failing to comply with a child support order. The statute allows a party to raise a defense that she “lacked the means to comply,” but she must show that she exercised due diligence in trying to make herself able to comply. The mother had made the same argument before the trial court, and the trial court found she was able to sign the forms, so the exemption could be allocated. This finding demonstrated the trial court had considered the evidence. The appeals court noted that an order for contempt is reviewed on an abuse of discretion standard, and therefore it did not reweigh the evidence or substitute its own judgment for the trial court’s.
The appeals court also noted that the mother showed that she had the ability to sign the forms when she did so in open court. She offered no explanation for why she could not do that before the hearing. The appeals court found no abuse of discretion in entering the contempt order.
The appeals court affirmed the order of contempt, but it remanded for a reassessment of the attorney fees award.
As this case shows, a failure to comply with a court allocation of tax exemptions can be very costly. It is also important that the parties understand the requirements of the order. If you are facing a custody dispute, an experienced Washington child custody attorney can assist you. Call Blair & Kim, PLLC at (206) 622-6562 or contact us online to discuss your case.
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