Tax Issues and Washington Child Support

Tax issues can be a significant hindrance in Washington divorce cases.  Couples may fight over who claims the tax exemption for the children, who declares the children as dependents, and the effect of any tax credits related to the children.  In a recent case, a husband challenged the child support order due to several tax issues.  He also challenged the asset distribution.

According to the court’s opinion, the couple had four children together.  They separated in March 2015 and the wife obtained a domestic violence protection order. The husband moved out of the home.  The husband stopped paying the mortgage in August and the home went into foreclosure.  The wife learned that the husband arranged a short sale.  After the wife and children moved out, the husband took the house off the market and moved back in.

The trial court awarded the house to both spouses “as tenants in common for sale” and ordered them to list the house for sale within 90 days.  The trial court set the child support payment at $723.46.  The trial court found the husband did not have sufficient means to pay spousal support and meet his own needs.  The court also ordered the husband to pay half the wife’s attorney fees.  The husband appealed.

The husband challenged the court’s order to sell the home and share the proceeds.  He argued the court erred in ordering the sale because it was likely to be at a loss, resulting in damage to his credit.  The trial court found, however, that he had the opportunity to sell the home for the amount owed on the mortgage, but did not do so.  The appeals court found no abuse of discretion in light of this uncontested finding.

The husband also argued the court erred in distributing the proceeds equally.  The wife had previously quitclaimed her interest in the property.  The appeals court noted, however, that the trial court has the authority to distribute separate property as well as community property.  Additionally, the trial court noted that it would have awarded the house to the wife if the parties could afford to keep it.  Because they could not afford it, the court ordered the sale, and awarded half to the husband in recognition of the repairs and improvements he made to the home after separation.  The appeals court found no error in the distribution of the proceeds from the house.

The court also rejected the husband’s arguments related to the child support.  He argued the trial court erred in not deducting his self-employment taxes from his income, but the child support worksheet showed that the trial court had deducted some self-employment taxes.  He also argued the trial court erred in failing to consider the earned income tax credit the wife received.  Sources of income that are included and excluded from the monthly income calculation are listed in RCW 26.19.071.   This list does not make any reference to the earned income tax credit.  The court therefore declined to consider the credit due to the lack of authority supporting including it.

The husband also argued the court erred in giving all of the income tax exemptions for the children to the wife.  Washington law requires the trial court to address the allocation of the federal tax exemptions for the children, but allows the court to divide them, alternate them, or both.  RCW 26.19.100.  Case law holds that the court should give the exemption to the party who will most benefit from it.  According to the opinion, the children lived with their mother and the father did not even take advantage of the two hours supervised weekly visits he was granted.  The appeals court found the husband had not shown an abuse of discretion.

In this case, the appeals court found no error or abuse of discretion in how the trial court handled the tax issues.  There is no authority requiring the court to include the earned income credit as income.  Furthermore, the court had appropriately allocated the federal tax exemptions.

If you are facing divorce or child support issues, an experienced Washington family law attorney can help you.  Contact Blair and Kim, PLLC, at (206) 622-6562 to discuss your case.

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