I have two children who live primarily with me, but my ex-husband wants to claim the children as tax exemptions - can he?

According to the Internal Revenue Code, the parent who pays for more than 50% of the children's expenses (including the children's portion of rent or mortgage, utilities, household food, car gas for transportation, etc.) gets to claim the children as a tax exemption. This is usually the parent with whom the children live more than half of the year. With that said, under New Mexico domestic relations law, the parents are free to negotiate how to allocate the tax exemptions for children. Keep in mind that child support amounts presume that the parent receiving child support also claims the children as a tax exemption; thus, if you receive child support and you give up the exemptions, you should really be getting more in monthly child support. Also, getting the tax exemptions assumes the receiving parent is working full-time and getting the maximum benefit from the tax exemptions.

My ex-wife is not working now and she still won't give me the tax exemptions. Is there anything I can do?

If your Parenting Plan or Marital Settlement Agreement awarded the tax exemptions to your ex-wife, and she was working at that time, you can file a motion asking the court to award you the tax exemptions, based on the change in circumstances, i.e., you wife is not working at present and the tax exemptions are essentially wasted if you don't get them.

When my ex-husband and I were divorced, I signed Form 8332 giving him the tax exemptions for our children, and I specified that the release was for all future years. Last year, he stopped paying child support. Can I void Form 8332 and claim the exemptions now?

No. There is no way to nullify this IRS form. The only way for you to get the exemptions is for the non-custodial parent to forego taking the exemptions. For this reason, the custodial parent should never sign an open-ended release of exemptions. A new Form 8332 should be signed for each year that the custodial parent gives up the right to the exemptions. In your situation, if both parents claim the children and the IRS audits the tax returns, the IRS will disallow the exemptions for both parents.

I'm getting married this year to a woman with two children, and all of them will be my dependents. Can I reduce my withholding now (before the wedding) to avoid over-withholding taxes?

Yes. You can claim as many withholding allowances as needed to equal you total withholding for your actual tax liability for the year.

If we can't agree on how to handle the tax exemptions, what will the court do?

Judges want to see the parents get the maximum benefit from taxes exemptions. If both parents are working, and the children primarily reside with one parent, then the custodial parent is normally entitled to the exemptions. If the non-custodial parent wants to claim one or more of the children as an exemption, then the judge will usually require the non-custodial parent to "buy back" the exemption. For example, if the couple has two children and the mother would normally be entitled to the exemptions, then tax returns would be prepared with the mother claiming both children, claiming one child, and claiming no children. The amount of the bottom-line loss to her by not claiming both children is how much the father would have to pay the mother in order for the father to get the tax exemption for one or both children. If the parents can't prepare the tax returns themselves and have to hire a tax preparer, then the father, in this instance, would be responsible for paying the tax preparer's fees.

If I claim the children as tax exemptions, can my ex-wife take the day-care credit?

No. You must claim the children as tax exemptions in order to be able to take the day-care credit in the same year.