Who is the Custodial Parent?

I really help you can help me out here. In summary: I'm 17 years old and applying to colleges this year. My mom is also suing my dad for divorce. As part of the temporary orders, my dad is required to fill out the financial aid forms (although he has been advised this may not be legal...)

"It is ORDERED that [father] shall be primarily responsible for the preparation and filing of applications for Financial Aid for [billythakid]. It is further ORDERED that Respondent shall fully cooperate and assist in the preparation, signing and filing of the financial aid applications for [billythakid]."

Now, in the course of completing these applications we've run into a couple issues.First, my parents have been listed as "separated" or "living apart" on all the forms (my mom moved out when she filed for divorced, technically they are married, divorce pending, not living together) although our state does not recognize legal separation. Is this correct?

Currently, the biggest issue is determining the custodial parent. My father has called the IRS, the CSS Profile, and the FAFSA people (taxes + financial aid forms, all federal documents) and confirmed that custody is defined as whoever had me 50%+ of the time since they separated. Which is my father. However, my mom is claiming that the court order states that she is the custodial parent, and thus she lists me on her taxes and all of the forms go under her as custodial parent. I am fairly certain the Temporary Orders do not define her as the custodial parent, she is called the "temporary sole managing conservator" and my father is the "temporary possessory conservator." There is also no mention of who claims me for deductions, or indication that my father needs to file Form 8332 which would allow my mom to claim me on her taxes.

Basically, the Temporary Orders say that I should be living with my mom all the time. However, she never enforced them, and I have not spent 1 night in her residence. My mother "shall have the sole right to establish the primary residence of the children**" and "periods of possession ordered above apply to the children...while that child is under the age of 18 years..." So I am not sure how she can just ignore it (but I am not complaining). In any case, she says that the court order decrees that she is custodial parent, and court order>IRS. While my dad is saying, that IF the court did say that, it was contingent on her following the temporary orders because then she would have had me more than 50% of the time and she would be custodial. But she ignored them, so any claim she had is gone. Who is right?

**If it is relevant, the divorce was filed on the grounds of "cruelty" and "unsafe living conditions" and the temporary orders were written "for the safety and welfare of the children." So I don't think she can establish my primary residence as this "unsafe" home without contradicting herself or being "cruel"...

Sorry for writing so much.

billythakid:

In any case, she says that the court order decrees that she is custodial parent, and court order>IRS.

She is wrong on that. Even if the court order determined her to be the custodial parent for the purposes of custody and support under state law, the court order is absolutely meaningless when it comes to federal tax law. State law and state courts cannot overrule federal law and state court orders are not binding on federal government agencies. Federal tax law is very clear on who gets the dependent exemption in the case of divorced or separated parents of a child under age 19: it goes to the parent with whom the child physically resided for the greater part of the year (i.e. 184+ days in 2012 and assuming they separated before July 1 of last year). That parent is defined as the custodial parent for federal tax law purposes. What the custody or support order says doesn't matter. Thus, for federal tax purposes, your father is the custodial parent and entitled to the dependent exemption assuming that you lived with your father for the greater part of the year.

In that case, in order for your mother to claim the dependent exemption for you on her return, she must get a signed declaration from your father in which he agrees not to claim the exemption and allowing her to claim it instead. The declaration needs to be on Form 8332 or contain all the same information that Form 8332 requires. A court order cannot function as the necessary declaration. The tax regulations make this very clear, as Treas. Reg. § 1.152-4(e)(1)(ii), last sentence states: "A court order or decree or a separation agreement may not serve as a written declaration." (While it would not matter to the IRS, the court order would matter to the court, which I can get into later if the order actually specifically addresses the exemption.)

IRS publications 501 and 504 both address the dependent exemption and the divorced/separated parent rule in detail. 

How that affects you or your financial aid application is unclear. Why are you interested in this? Your parents are not yet divorced and presumably the FAFSA and other aid forms will need the information for BOTH parents. Apparently the order requires that your father take charge of completing the applications but that your other mother must cooperate in providing whatever she needs to provide. So, that should be enough to ensure that you get the information needed to complete the financial aid packages. 

Thank you!

There are a couple reasons I am interested in this. First, it is imperative that my father and mother file separate forms for everything, because there may have been instances where large amounts of fraud were entered into joint forms (past taxes etc) which has been a huge headache for my dad. Also, my parents taxes have to match up apparently, and the taxes have to line up with the financial aid forms. So I need to get my mom on board with it before she files a lot of crocked-up tax data that is a nightmare for everyone (which is difficult because she seems to be getting dubious legal advice from some unknown parties that she takes as the gospel truth). As far as I can tell she is trying to drag this out long enough that we miss the deadlines, and my dad has to pay the tuition out of his retirement. Or I go to community college. So yeah....

And, sorry, there was a typo.

"It is ORDERED that Petitioner (mother) shall be primarily responsible for the preparation and filing of applications for Financial Aid for [billythakid]. It is further ORDERED that Respondent (father) shall fully cooperate and assist in the preparation, signing and filing of the financial aid applications for [billythakid]."

PS - If, hypothetically, one of the children in the divorce read the orders that were not to be discussed with the children, what is the worst that could happen?

Sorry to read you are caught in parent wars..I've seen then to extent that parents fail to file tax returns so as to avoid financial disclosure to the enemy.  A couple of additional thoughts:

the FAFSA logic essentially keys off the CP and totally ignores the NCP.   To some extent it makes sense to pick the weaker financial parent to fit the cp role for aid purposes if the facts can be forced to fit. to some extent the first aid package drives the next one. FAFSA does NOT make bed checks..but apparently a high % of applications do get checked against the cp tax return, note the NCP tax return does not matter. It might makes sense for your parents to cooperate so as to get you best aid the facts support.

TX does not require that parents pay for college but it allows for same in the order...do you realistically expect each to contribute to college?  YYour parents can add your college to a divorce order....

If mom realistically thinks you are her dependent then she is entitled to complete the FAFSA 

Were I dealing with an adversary who liked to fudge the economics I might chose to delay completion of my tax return as long as law allows and perhaps even longer so as to avoid having any paper trail the enemy can discover or require me to produce.

If I am ordered to complete a document which requires your information and you refuse to give it to me then the completion becomes impossible and impossibility is a pretty good defense for not getting something done.

There can be severe penalties for a falsified tax return! 

I think the FAFSA instructions treat separated and apart as divorced wo regard to state law  EG one can complete the forms.

One of the parents needs to complete the FAFSA with his or her accurate data like SOON 

i don't know if parents are squabbling over some major asset...but there is a quirky rule that assets in a divorce debate are OUT of the asset count under FAFSA.

"If mom realistically thinks you are her dependent then she is entitled to complete the FAFSA"

What qualifies as realistic? I have not been living with her, but she desperately wants to have me on her taxes etc. At the hearing (my dad was not present) she said who knows what to make herself the sole whatever, instead of doing a joint thing. She must have said some heinous things, as google is telling me that the "possessory conservator" that my dad is is usually reserved for parents who are a) criminals b) drug addicts and/or c) dangerous to the kids. http://www.heilalalaw.com/1/previous/2.html And if I am on my dad's taxes, she looks crazy for allowing me to live there after what she claimed in court.

"i don't know if parents are squabbling over some major asset...but there is a quirky rule that assets in a divorce debate are OUT of the asset count under FAFSA."

The driving factor behind all of this is my parents business, but it doesn't have to be listed anyway because it has less than 100 employees as the FAFSA people told us.

"There can be severe penalties for a falsified tax return!"

Not if you can't pursue the issue. I have heard it is near impossible to find a lawyer willing and equipped to deal with a convoluted federal case involving tax fraud when a family law issue (divorce) gets dumped on it (with very convenient timing, I might add).

--------------------------------------

She just sent me this behemoth (obviously not written by her), any ideas on what to tell her.......?

"The Temporary Orders also say that as temporary sole managing conservator, I have the following exclusive rights and duty: 

1. the right to establish the primary residence of the children;
. . . . .
4. the right to represent the children in legal actions and other decisions of substantial legal significance concerning the children;
. . . . .
5. the right to make decisions concerning the child's education.

Under these Orders, I am obligated to follow through with the various requirements specified in the Orders in a manner consistent with them.

The messages below contain discussions about how to proceed with requirements for payment of Federal taxes, and also for applying for Financial Aid for College for [me]. Based on the Court Orders, it is my responsibility to follow through in payment of Federal Taxes, and also to apply for financial aid for [me] for college as the temporary sole managing conservator. Specifically, my understanding is that this requires the following of me:
- For Federal Taxes, if I file as married filing separately, to include all [x] children as my dependents;
- For Financial Aid Applications and Forms, to complete these as the temporary sole managing conservator or custodial parent.

These requirements are implied by the provisions of the Order. The Temporary Orders provide a legal structure for each of us, and it is up to us to follow through with implementing the Orders as intended in various situations that arise. For instance, with respect to the process of applying to colleges and financial aid for [me] for school, although the Order does not explicitly say that "Temporary Sole Managing Conservator" means "custodial parent", it does not need to make that statement. Given that the Order says I have the exclusive right to make decisions concerning the child's education, it is implied that I am the "custodial parent" for purposes of decisions and forms related to college for [me], including financial aid applications. Also, although the Order does not explicitly say that you need to fill out the IRS Form confirming that the children are my dependents, it does not have to say that either; the requirement is implied as a natural consequence of the Order."

billythakid:

Specifically, my understanding is that this requires the following of me:
- For Federal Taxes, if I file as married filing separately, to include all [x] children as my dependents;

Again, she's wrong on the tax law issue. A court order making her the "sole managing conservator" has absolutely no effect regarding which parent may claim the dependent exemption under federal tax law. She really needs to get advice from a tax lawyer. Many family law attorneys do know tax law very well, unfortunately, and it's a bad idea to take tax advice from anyone not expert in tax law. 

I suspect you are asking who should really provide information on the FAFSA.  The court has ordered that it be your mother. 

 If you were in CA, I would tell you it's more important to meet the state and/or university deadline for filing your FAFSA than it is to have the information be 100% accurate.  If you miss that deadline, it won't matter much that your FAFSA is perfectly completed.  Only one of your parents has to sign the FAFSA, your university may have a supplemental application that is required for university aid that will require information and cooperation from both your parents.

When did your parents separate?  Who have you lived with most in the last 12 months?  In the financial aid world, the parent who should be on the FAFSA is the parent who provided the most support in the last 12 months.  So if your parents separated October 1, 2012, and your mother was a stay-at-home mom, your father's income should be reported on the FAFSA because your mother would not have provided any financial support for you.   On the other hand, if your parents separated January 2012 and you have lived with your mother ever since, it would be her information provided on the FAFSA.

Be advised that there are some institutions out there who hold that if the custodial parent lived off child support and/or alimony, then the non-custodial parent (NCP) must provide info on the FAFSA because the custodial parent's income was derived directly from the NCP.  Other institutions see that as hogwash.

I am not aware that Texas has any laws that would require your father to pay your tuition simply because you filed your FAFSA late, but I am not an expert on TX family law.

And finally, for all those who deride community colleges, please be aware that university graduates who completed their lower division at a community college walk away with the same diploma as those who went to the university straight out of high school.

I suspect you are asking who should really provide information on the FAFSA. The court has ordered that it be your mother.

Yes, I need to know who is my custodial parent on both the FAFSA and CSS Profile. On the CSS it is not even a question, they ask "who did you live with more over the past 12 months" and whoever you put is entered as custodial parent. How did you get that the court ordered my mom to do that?

A couple facts:

My mom moved out late November.

The temporary orders were instated the day of the hearing, which was late December.

I lived with my dad the whole time.

My dad is self employed (his business) which does not make any money. However he pulled out money from his retirement which is listed under income on his taxes I believe, and also lists half of my mom's income because we are in a community property state.

My mom makes about 80k/yr and lists 40k on her taxes and the other 40k is on my dads taxes.

And finally, for all those who deride community colleges, please be aware that university graduates who completed their lower division at a community college walk away with the same diploma as those who went to the university straight out of high school.

My apologies, I didn't mean to insult community college in any way. I just meant that if we can't get financial aid then I will go to a community college, which I would prefer not to do.

"It is ORDERED that Petitioner (mother) shall be primarily responsible for the preparation and filing of applications for Financial Aid for [billythakid]. It is further ORDERED that Respondent (father) shall fully cooperate and assist in the preparation, signing and filing of the financial aid applications for [billythakid]."

If the court ordered your mother to complete the FAFSA, then I would go with that.  Once you've been accepted into whichever college or university you attend, contact the financial aid office and ask about the reality of your situation.  You may well be able to change to your father's actual income and may be able to have the withdrawal from his retirement ignored as a "one-time only" source of income.

I can't speak as to why your father would report 1/2 of your mother's income on his tax return as his own.  Taxagent may be able to addressthat.

your mom may be out to lunch but that won't get required form done ..she writes to complete the FAFSA is her responsibility..so request that she get it done this week ..and you sign it after you read it..but don't hold your breath....

me , I'd get one done and in and sort out any gaps later.....stay clear of a falsified form....

id be a little sensitive to prospect that the other side can compel the production of the FAFSA forms in a witch hunt for information ..try to stay clear of parental battles. 

I'm not sure that "primarily responsible for preparation/filing" means "must be listed as custodial parent," can you speak to that?

"I can't speak as to why your father would report 1/2 of your mother's income on his tax return as his own. Taxagent may be able to addressthat."

It is because TX is a community property state, so everything earned in Texas is split evenly between my parents. Her income, earned here, is split. But the money from my dad's retirement, earned in a separate property state, is not. I assume CA is not community property (only a minority of states are).

me , I'd get one done and in and sort out any gaps later.....stay clear of a falsified form....

The most surefire way to stay clear of a falsified form is for my dad to file it.

IF mom files a false FAFSA based on false tax returns she is asking for trouble.

If dad files a correct FAFSA based on correct low business income you may have decent aid options and dad is clean as to what is on forms. 

I just got it sorted out everyone. Thanks!

We spent 2-3 hours on the phone with the IRS, while they basically repeated ad nauseum that they do. not. care. what the court order says, UNLESS it has some very specific wording regarding form 8332. Which it does not. So my mom is the noncustodial parent for the taxes and all forms, despite the fact that she is "temporary sole managing conservator" (texas-speak for custodial parent). You have all been very helpful.

billythakid:

It is because TX is a community property state, so everything earned in Texas is split evenly between my parents. Her income, earned here, is split. But the money from my dad's retirement, earned in a separate property state, is not. I assume CA is not community property (only a minority of states are).

You are correct that only a few states are community property states. But California is indeed one of them. There are nine community property states, and they are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Note that most of these states were in areas either formerly controlled by Mexico or France, and the property systems of those countries influenced the property law development in those states.

As to how income is allocated between a married couple when community property law applies, it is not quite as simple as dividing everything in half. The laws of each state are a bit different in defining exactly what counts as community income. IRS publication 555 discusses how to deal with community property issues for federal income tax.

billythakid:

We spent 2-3 hours on the phone with the IRS, while they basically repeated ad nauseum that they do. not. care. what the court order says, UNLESS it has some very specific wording regarding form 8332.

Then the IRS person you spoke to is not very current. The IRS used to take the position that it would accept some court orders as functioning as the declaration needed to shift the dependent exemption from the custodial parent to the noncustodial parent (as those terms are defined for federal tax purposes). The IRS was never correct in doing that, as a decision from over 10 years ago in the Tax Court confirmed. For whatever reason, however, the IRS persisted in that practice even after the court decision. Finally, though, in 2009 the Treasury issued new tax regulations that explicitly say that provisions in the court order may not function as the declaration (i.e. as a Form 8332 substitute). I quoted that regulation in my first reply in this thread. Thus, today the only way the IRS should allow the noncustodial parent to claim the dependent exemption is where the noncustodial parent has attached to her return a Form 8332 or similar declaration signed by the custodial parent. Simply put, the court order won't matter to the IRS.

Had the orders had something in them about allowing the noncustodial parent the exemption that still matters because, while the IRS wouldn't care, the court that issued the order would care. Since your parents’ orders evidently do not have any such provision in them, I won't get into a discussion of that.