Author Topic: For the Love Of GOD help me! tax questions for an expert.  (Read 4320 times)

Haasume

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For the Love Of GOD help me! tax questions for an expert.
« on: August 11, 2014, 02:13:26 AM »
Quick background-
       My son is now 2 1/2 yrs old, Mother and I were never married. After mediation, conciliation, individual and joint therapy sessions,multiple trips to court and finally Case Management my sons mother and I have "agreed" to shared residency.  We also agreed to a shared expense order and I would keep a wardrobe at my home for him independent of hers. THE ONLY PROBLEM IS... I have done this since day one and have never gotten any sort of credit even when I made our Case Manager aware of that fact months ago.
       I feel this rant could get lengthy so I am just going to break it down shotgun style and hopefully someone can help me out.
      1) My X has a (flexible spending account) from her job that she pays child daycare $956/mo and health insurance for our son from her employer for $103/mo. The Flexible spending account takes the money to pay for these two things on a Pre tax basis. Now,
 ($956 +$103)12 = $12,709/yr. at roughly 30-35% savings by not having that money taxed comes up to a pretty significant income.
    Question 1 - She has never disclosed this flex spending account or offered that money to figure into her Child support income before. Is that allowed? Isn't that fraud?
     Question 2- I am a disabled veteran and do not work. I have offered many times to provide daycare every day for FREE but my X won"t allow it. Beings I am more than willing to provide daycare for FREE yet she refuses to allow me to shouldn't she be responsible for the only one responsible for the $956 in monthly daycare bills?
      Question 3- My current wife carries my son "her stepson" on her insurance from the federal govt basically for free. It is good insurance and FREE yet my x insists she be allowed to claim the $103/mo on her child support worksheet. Can she do this? If he already has insurance this would simply be secondary insurance.

I have more tax questions that I will post next but I dont want to overwhelm anyone because I am bout to loose my mind with my next post. Any feedback would be greatly appreciated.   Thank you

Guru

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Re: For the Love Of GOD help me! tax questions for an expert.
« Reply #1 on: August 13, 2014, 05:48:55 PM »
Haasume,

Your questions really seem to me like they need to go before a judge.  I'm not exactly sure how flex spending accounts are handled, but since there is a tax advantage over others who don't have a flex account, you would need to look at this amount.  I think you are on the right track by assuming a 30% tax liability.  However, the actual tax liability would come from the IRS tax tables and would be based on the gross income before taxes.  Your second question is really more of a question of "right of first refusal" which basically means when one parent can't care for the child, the other should be given that opportunity.  I agree that it doesn't make sense to pay $1000/month for a babysitter if a parent can care for the child.  However, make sure that you live close enough to mom to make this practical.  If you offer to do the driving, that might make it more approachable for mom.  Your final question is also a question for a judge.  Usually I think a judge would order what makes the most sense for the child and the family.  If your son will receive equivalent or better coverage for a much cheaper price, it would make more sense for your wife to cover him.

So really, you need to get an attorney and fight these things in court.  However, if you think mom might agree to some of this, mediation could help you and save you both a lot of money and aggravation.

KTM

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Re: For the Love Of GOD help me! tax questions for an expert.
« Reply #2 on: August 15, 2014, 09:39:42 PM »
1. A Flexible Spending Account is an account with funds set aside from someones income in increments each pay period. It is not additional income. But, allows for special tax treatment for specific Child Care or Health Care expenses that are budgeted to this account. Having this type of set aside account would not effect a Child Support Order.

2. The question of you providing care for the Child while the other parent is working vs. the child being in childcare is a question for the Court and would need to be challenged by you. Be aware that this may result in you being required to pay for an in home evaluation and other counseling prior to the Court modifying the current Order.

3. The Court will Order one parent or the other to provide Health Insurance for your child(ten). The parent Ordered to provide the insurance can claim the credit.

Haasume

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Re: For the Love Of GOD help me! tax questions for an expert.
« Reply #3 on: August 17, 2014, 08:09:23 PM »
Thank you  KTM and GURU for the responses, to answer some of your questions I live 7 miles from the mother so distance shouldn't be an issue, the only reason she is fighting for daycare is because it is located 1/2 mile from her work and more convenient for her. KTM- I understand the statement you made of whichever parent is ordered to keep medical insurance for the child is the one that gets the credit but, why would they order a parent whose insurance $103/mo and secondary to my insurance which is FREE and just as good or better than the secondary. Does any law state there has to be primary and secondary insurance if its available? I know many people who do not have secondary.

KTM

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Re: For the Love Of GOD help me! tax questions for an expert.
« Reply #4 on: August 18, 2014, 03:04:46 PM »
The Court gives Orders based upon the facts and information presented to them at the time of a hearing.

Guru

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Re: For the Love Of GOD help me! tax questions for an expert.
« Reply #5 on: August 18, 2014, 06:54:28 PM »
To my knowledge there is no law that requires both primary and secondary.  That would force both parents in a marriage to work or pay out the nose for insurance.  So, no.  But if alternative insurance is free, it would be a great idea to take it.

I completely agree with your logic and my guess is that the court would agree with you as well.  If great insurance is available which will reduce the financial burden on the family, then it should be taken.  One of our users here had a similar situation and his ex was emphatic that she provide the insurance regardless of the cost.  His insurance was free just like the one you are discussing.  In the end, she paid for the insurance out of her own pocket and he was not required to pay for it because he could offer better insurance at a cheaper price - she was just being controlling about it.  So, maybe that's an option for you.  If she absolutely wants to cover the kids, then let her do so, but she will be responsible for the payment.  You can always provide the secondary insurance.

Insurance is a touchy subject now because of Obamacare.  Be careful that you have coverage to avoid penalties.

WillC

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Re: For the Love Of GOD help me! tax questions for an expert.
« Reply #6 on: October 16, 2017, 10:26:08 PM »
Hassume-
A flex spending account offers an elective pre-tax contribution to an account for may things such as insurance and child care expense. In general, you don’t see a flex account used for insurance premiums, but for out of pocket costs associated to the insurance, such as copay and deductibles. Typically pre-tax premiums are due the the employer establishing a section 125 plan that allows for their share of insurance to be tax exempt. Daycare is also separate, but inclusive, of a flex plan. There is an annual limit of $5,000 than can be utilized in a flex for daycare, and shows on the w2, as this also impacts the amount that applies for purposes of daycare credit on the tax return.

Since a flex account is on a pre-tax basis, the real savings to the individual is both the income tax rates, as well as savings on social security and Medicare paid in from the employee share. This is 7.65% up to the SS wage base limit, and no limit on the Medicare portion. To answer your question in that regard, it will really depend on the total wages, however, since these are elective contributions to a flex plan, it does not change the gross figure for determining support as far as I’m aware, but I do believe this is a consideration for any tax adjustment impact if this becomes a matter, but can honestly get difficult to figure.

I would also assume that since Kansas looks at time spent with each parent for purposes of determining any adjustment, that may be part of the reason for not wanting to allow you to have time during the day, as my guess is this helps limit the time adjustment impact. Just my opinion from looking at this from the outside.