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Annual exchange of tax returns

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Daddo posted 8/18/2013 23:53 PM

A question about terms of divorce.

Is is standard for arrange for an "annual exchange of tax returns to meet and confer on child support?"

What if no agreement is reached on this "conference" - do you go back to court?

Any suggestions on language that would be more clear? Does anyone know what the courts have said about this type of provision (in California)?

[This message edited by Daddo at 11:53 PM, August 18th (Sunday)]

homewrecked2011 posted 8/19/2013 00:05 AM

I'm not sure,, but I'll tell you something I learned during my ordeal. The total income they show on their tax return is not their true gross income.

It is what they earned AFTER and pre-tax items such as 401K contributions, health ins., etc. Make sure if he is working for a company that you say that you want the copies of the tax returns yearly AND a letter from him company stating the total gross they paid him that year.

XWH actually made 11,000 more than what shows on his W2 due to all the pretax stuff he pays....

Nature_Girl posted 8/19/2013 00:13 AM

I've never heard of having to share tax returns AFTER divorce. I would never consent to such a thing.

PurpleRose posted 8/19/2013 01:17 AM

Why would you need to exchange taxes after the D? The state can look up income if you are concerned with CS amounts.

homewrecked2011 posted 8/19/2013 18:00 PM

I thought to modify child support you had to show what your income was for the previous year... Is that not right?

courageous posted 8/19/2013 18:40 PM

Don't do it! She can only request a review of your income for child support increase every 3 years. She would request it thru the child support office and not directly from you. It sounds like she wants your info so she knows when to hit you with an increase.

There is absolutely no need to do this. Who would be claiming the kids on the tax returns each year? Divorced couples don't file tax returns together either. There is no reason to discuss tax return items unless the child tax credit is given to a different person each year.

HopeImOverIt posted 8/20/2013 13:21 PM

It is not standard, but I do believe it is fairest to both parents. In many states the standard is to readjust child support every 3 years OR when there has been a substantial change (such as 20%) in income. However, without exchanging tax returns how do you KNOW whether there has been a 20% change in the other person's income?

Most state laws are written to say that children are entitled to be supported by their parents, and entitled to more support if the parent or parents make more. Being transparent with returns helps ensure that the children are not being denied support they are entitled to.

Similarly if the NCP's income goes down, the annual adjustment gives an immediate decrease in the child support payment (fairest to NCP) rather than having to wait for 3 years.

In my state, you do not need to go back to court if you can't agree on a child support adjustment. It is handled by the child support enforcement agency. My divorce decree specifies this is the procedure.

Possibly you don't completely trust your Ex to give you his/her REAL return, as opposed to one they print at home with numbers picked out of thin air. The IRS allows a trust but verify alternative: Form 4506T-EZ allows your Ex to request a free transcript of their tax filing and have it sent directly to you. And vice versa.

Regarding the deductions from income that the federal tax law allows - 401K, insurance, etc. - one possible way around that is to use the income amount on the W2 that was reported as state or local income. In my state they don't allow deductions from taxable income the way the federal government does. Another way around that is that the W2 does at least report the 401K amount so you can add that back in. Health insurance deductions are shown on some paystubs so the final one could be exchanged if they show year-to-date deduductions.

I agree that it is not common to share tax returns annually with the Ex. Many people would prefer to show their returns to the state bureaucracy than to their ex-spouse. However my preference is to deal directly with my Ex.

I never "meet" with my Ex to discuss child support. I email him a spreadsheet with my calculation, and he either agrees or sends back a different spreadsheet with an explanation of what he thinks I miscalculated.

Daddo posted 8/20/2013 20:08 PM

Thank you everyone for the thoughtful replies.

Exchanging tax returns annually seems like an invitation to be arguing over child support every year. I like the suggestions that we do it every 3rd year.

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