Implications of allowing Ex to claim both kids as dependents
November 13, 2021 8:19 AM   Subscribe

My ex is suggesting that I allow him to claim both of our kids as dependents so the kids can qualify for medical assistance. I am concerned about the implications of this on my personal finances.

I am recently divorced, and the divorce decree states that my ex will provide health insurance for our children through his employer. He quit his job with excellent and affordable coverage, and took a job at a small company that does not provide health insurance (but does contribute to an HSA to offset healthcare costs). He let the insurance lapse, and as of today my kids do not have health insurance. He is now discovering that the cost of healthcare on the private market is higher than he anticipated and is asking me to contribute to the costs.
Our divorce decree states that he will cover insurance through his employer, and "in the event such coverage shall no longer be available husband and wife shall confer and reach agreement concerning alternate coverage." If we cannot come to an agreement we are required to seek mediation before a court challenge.
One "solution" he has suggested is that I allow him to claim both kids as dependents, because in that case they would qualify for medical assistance. He would be willing to split and child tax refunds/credits, etc with me, but I am concerned that my own finances, tax responsibilities, etc will be negatively impacted by the fact that, according to my taxes, I am a single person with no dependents, even though I provide 50% of overnight care and about 87% of logistical support for the kids.
I want to stand my ground on this. There are definitely emotional components to this (I feel resentful that he is essentially asking me to pick up the costs of him following his half-baked plan to change career paths), but I do want to understand better the implications for me in claiming 0 dependents on my taxes, so I can take that into consideration in my response to his requests.
posted by deadcrow to Work & Money (16 answers total) 1 user marked this as a favorite
Best answer: Go to mediation. He will not keep a promise to do anything favorable to you otherwise. You’re divorced—your financial interests are not his.
posted by sock poppet at 8:30 AM on November 13, 2021 [48 favorites]

Best answer: There are financial advisors who specialize in divorce, and I think you need to talk to one before going to mediation. The mediator may not know the ins and outs of what you're really being asked to give up. You need to have information from someone who is trying to figure out what's best for you and what compromises would still work out OK. It will cost money, but in the long run, it will be worth it.

The way he let the insurance lapse sounds very irresponsible, so I agree that you can't trust promises he makes to you.
posted by FencingGal at 8:45 AM on November 13, 2021 [20 favorites]

No, don't let him claim the kids as his dependents. You're right that it will have a huge impact on your finances. Please talk to your divorce lawyer who is versed in financial aspects of divorce and get their actual legal advice on this.
posted by MiraK at 9:10 AM on November 13, 2021 [16 favorites]

At least find 1-3 mediators you are willing to work with, and find out how soon you can get appointments.
posted by amtho at 9:24 AM on November 13, 2021 [1 favorite]

Your kids need good coverage; can you put them on your insurance? If so that would be in their vest interests. HSAs and govt coverage may not be as good especially in emergencies. If you haven't already find out what the financial impact of putting them on your insurance would be. Them losing their dad's insurance would qualify as a life event that would let you change your current coverage w your employer.
posted by emjaybee at 9:27 AM on November 13, 2021 [1 favorite]

Has it been last than 60 days since he quit his job? If so, he should be able to sign up for insurance covered by COBRA for at least 18 months.
posted by ShooBoo at 9:58 AM on November 13, 2021 [7 favorites]

Best answer: This may impact your tax filing status. If you can claim one child, then you can also file as Head-of-Household instead of 'Single'. That filing status change will significantly impact your standard deduction and tax-brackets. (Head-of-household is the most-favorable filing status in terms of tax-rates).

To determine if you can still file as head-of-household even when you're not claiming dependents, you'll need to consult an accountant or tax-advisor. When I was in this situation (allowing my ex to claim both kids), Turbo Tax refused to allow me to file as head-of-household. So I filed as single, thinking I'd get around to consulting an accountant eventually. (Still on my list of things to do)

You're talking about making a significant change to your divorce decree / parenting plan. Therefore, you do need to go through a mediator and get the resulting change signed by a judge to make it legal and enforceable. Do not rely on good-will and informal agreements with an ex-spouse, especially a recent ex where things are still settling.

I've found that mediators (and attorneys) are not as familiar with tax code that impacts their clients. So do answer this question about filing status (and also know a dollar amount that you're giving up by not claiming a dependent) before you go into mediation.
posted by u2604ab at 10:09 AM on November 13, 2021 [6 favorites]

Aren't there actual tax rules about what makes kids dependents? It's not just up to the parents. If you're doing more than 50% of the care, you may be the claimer regardless of anyone's preferences. Either way, I'd get legal and tax advice on this.
posted by Frowner at 10:42 AM on November 13, 2021 [5 favorites]

One "solution" he has suggested is that I allow him to claim both kids as dependents, because in that case they would qualify for medical assistance.
I don't even know what this means! Is he still employed? Is his income so low that he would get a subsidy?

Bottom line: question if his actual proposal would even work the way he claims. Be careful.
posted by metahawk at 11:01 AM on November 13, 2021 [3 favorites]

Some parents I know with joint custody of two children each declare one child for tax purposes and alternate every year, so that parent A declares kid#1 one year and kid#2 the next year, etc. This doesn't solve the insurance issue, but might help with tax issue.
posted by mareli at 12:21 PM on November 13, 2021 [1 favorite]

I can't speak to what you should do given that you have a LOT going on with your ex. But it has made sense for me to let my ex claim our kids for various reasons. To decide who owes what, we each calculate the difference between the two possible ways we could file, and figure out something fair based on that. In your case, I would say that he owes you whatever you would be getting if he HADN'T opted to neglect his responsibilities to his children.
posted by metasarah at 12:58 PM on November 13, 2021 [2 favorites]

I think there is more to this then just should you let your ex claim the kids for health insurance purposes. My ex pays, and paid for health insurance without claiming his kids- he is a consultant now and pays his own insurance and still doesn't claim the kid- so I would look into if this is truly the case. I would also look into if there are other options for health insurance for your kids- he seems to not be trust worthy in this regard, and if it were me, I would check in about what health care is available for your kids in your state- many states have great healthcare available through Obama Care.

In terms of your ex claiming the kids- this is something that would be a year to year thing that you would grant him- the IRS has this question built into tax returns, and it is clear that the person who holds the majority of custody is the one who has rights to claim the kids. You can absolutely give him the right but it isn't something that can be giving away indefinitely, and it something the IRS would have no issue penalizing him on if you and he didn't have a yearly agreement giving him the rights.

In terms of how I handled any issue in my divorce, I would always calculate the difficulty and the issues that would spill over on my kids and cause them angst because their father might be a jerk about the issue- and I think that is a calculation you have to make in regards to this- and as I said above, health insurance might be one of those things that taking your ex completely out of the equation might make for an easier time for you and your children in the short and long term.
posted by momochan at 1:07 PM on November 13, 2021 [3 favorites]

Lots of kids are covered under CHIP. Confirm that yours are not already eligible for it before doing anything else.
posted by hydropsyche at 1:22 PM on November 13, 2021 [3 favorites]

If you can claim one child, then you can also file as Head-of-Household instead of 'Single'. That filing status change will significantly impact your standard deduction and tax-brackets. (Head-of-household is the most-favorable filing status in terms of tax-rates).

I want to stress this again and note how big of a difference it is in many cases. Also, there are child tax payments going out right now. Who is getting those? If you are and cannot claim a child for 2021, that is going to complicate things even more. Are you not able to add your kids to your health insurance? If the decree was for him to provide the insurance, he should pay you the cost of the premiums. It really does seem like you need a third party to intervene here. Considering he is required to provide this in the decree, you should see if your original lawyer has advice.

You also need to be wary of him claiming the kids without your permission. If he files first, you may end up not being able to file electronically and be forced to paper file and include notes with proof of your right to claim them.
posted by soelo at 4:46 PM on November 13, 2021 [6 favorites]

Someone who is not on metafilter asked me to share this with you:

"CHIPS is means tested in most states, and many will check the income of the non-custodial parent and seek reimbursement if necessary."
posted by belladonna at 11:31 AM on November 14, 2021

Best answer: I mean the guy couldn't keep his shit together enough to keep his own kids insured, somehow I feel like allowing him to claim the kids and reimburse you is super unlikely to end in actual reimbursement. I'm sorry you're going through this but I definitely would not move forward with his plan.
posted by possibilityleft at 9:07 PM on November 14, 2021

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