Author Archives: Matthew Engelson

How the 2021 Child Tax Credit Will Affect Your Child Support

Let’s face it….2020 and 2021 were challenging years for parents whether you were divorced or not. The 2021 child tax credit passed by congress and signed into law by President Biden helped a lot, but for those who share custody of a dependent it might actually have made things more complicated. Here’s what you need to know.

The advanced child tax credit represented a financial boost by expanding the existing $2,000 per child credit to $3,600 for children age 5 and younger and $3,000 for those between 6 and 17. At the same time, it created a potential headache for divorced and separated parents for whom custody of a child has shifted from one household to another – or who alternate the years that they claim their child as a dependent. That’s because when the IRS determined who was qualified to receive the credit and how the monthly installments should be disbursed, they made their decision based on who claimed the dependents on the most recent return on file – generally either 2020 or 2019.  If you have received that payment and are not entitled to it because your child is living with your ex or it isn’t your agreed-upon year to claim your child as a dependent, you could end up owing the IRS for money that you received. The good news is that there is a relatively simple fix available. By logging into the Child Tax Credit Update Portal, you can simply unenroll from the monthly advance payments. Doing this will allow you greater control of how and when you get the credit, if at all.

There are a few things that you need to keep in mind. First, if you and your spouse have been alternating years of claiming your child as a dependent, there is a good chance that you both got a stimulus check from the American Rescue Plan’s first two payments. But Congress recognized that mistake pretty quickly, and by the time the advanced child credit checks for 2021 were ready to be sent out, only one parent was able to receive the payments – the parent who claimed the child on their 2020 tax return. If you are not claiming your child as a dependent in 2021 and you’ve been receiving checks because you claimed them in 2020, then you could end up owing as much as $3,600 back. The IRS recommends that parents in this situation stop the payments from coming by unenrolling via the portal. You can then claim the credits on your tax return when it is your turn again in 2022.

The simplest approach to this scenario is for both parents to unenroll and forego the monthly payments in lieu of the credit. This would avoid confusion and keep both parents from having to worry about owing money back to the IRS. However, if your ex doesn’t unenroll you will still be able to claim the credit on your tax return when it is your year to claim your child as a dependent.

Another important thing to understand is that if you or your spouse are past due on child support payments, you will not be able to use the government payments as an offset or to reduce overdue taxes or debts from previous years unless you receive the funds as a refund after filing your tax return.

For more information on how the child tax credit might impact your particular custody and support arrangement, contact our Pennsylvania divorce law firm today.

How Divorce Affects the Issue of Vaccinating Children

Turn on the news or open your favorite social media platforms and you’re sure to see battles for or against mask and vaccine mandates. The vaccination issue quickly shifted from medical to ideological and from policy to personal now that the FDA has approved the vaccines for children 12 and older.  For parents who are negotiating issues of child custody, it introduces a new topic for dispute that is likely to become even more important as approvals are expected soon for children under 12 for the vaccine.  Here’s what you need to know if you and your co-parent disagree about whether to have your child vaccinated.

In almost all cases, parents in Pennsylvania share what is known as legal custody of their children. Shared legal custody means that each parent shares equally in the decision making for all major medical, educational and religious decisions. The parent who has the majority of physical custody does not get a larger say in legal decisions and this means that both parents need to agree as to whether their child should be vaccinated against COVID-19. Though shared legal custody is granted with the idea that parents can come to consensus on what is in their child’s best interest, that is not always the case.

In a recent headline grabbing case, a Chicago judge ordered a mother temporarily lose custody of her child until she herself got vaccinated. Though that order was later reversed, it gave rise to significant discussion about the topic, with legal experts agreeing that if the child had been immunocompromised, then the mother’s vaccination status would clearly have been a concern.

The intensity of emotions and opinions regarding everything surrounding COVID-19 suggests that there will be many parents who turn to the court in order to modify their legal custody agreement and ask the court to give them authority to decide whether or not their child is vaccinated against COVID-19– or all future medical decisions in general.  The courts may assign one or the other parent sole legal custody regarding vaccination, but only after both parents present the reasoning behind their position. Though there are some scenarios where a parent’s religious beliefs or a child’s medical needs override mandates, the courts generally take the position that legal custody issues are to be determined by what is in that specific child’s best interest.

The position the Courts will take when faced with a dispute over a child’s vaccination against COVID-19 is not currently know and will certainly vary with each specific case.  There is a strong possibility that the Courts will require parents to seek advice from the child’s medical provider as to the risks and benefits of vaccination and then may Order the parents follow the recommendations of said medical provider.  Another factor that may impact how the Court’s decide the issue of vaccination is the position of Pennsylvania’s schools, both public and private. There are currently several vaccinations mandated for attendance at Pennsylvania’s public schools, and there is a strong chance that the COVID-19 vaccine will be added to the list of required vaccinations.

How Are Retirement Funds Handled in a Pennsylvania Divorce?

Going through a divorce forces you to look at nearly every aspect of your life from a new perspective, and to confront the reality that the emotional and financial foundation you’ve spent years buildings has to be re-evaluated and rebuilt.

Of all the assets accumulated through the course of a marriage, retirement funds are among the most challenging for many to address. In most cases, the funds represent both sweat equity from their labors to support themselves and their family, and a future they’d anticipated spending together, now taken away from them. The rules around retirement accounts have contributed to the sense that they are untouchable, and that can make negotiations around them fraught. Still, just as is true of bank accounts, stock portfolios, real estate and other investments, they are assets subject to Pennsylvania’s rules of equitable distribution. However, the prohibitions against early liquidation have led to special processes and forms being created to allow them to be divided without either party being penalized.

Are the Funds Marital?

The first question that needs to be answered is whether the retirement funds were accumulated during the course of the marriage or beforehand. Any accounts set aside prior to the marriage are considered separate, while those earned during the marriage are considered marital, and therefore subject to equitable distribution.  If the plan started after the marriage then all contributions are marital but if established before marriage and continued through the marriage it is considered co-mingled, and that means that some complicated tracking will need to be done to separate out what is marital. In most cases, anything that started after the date of separation is not considered marital or part of the marital estate.

The Question of Equitable Distribution

Once marital assets have been separated out and evaluated, the various factors taken into consideration for equitable distribution will be applied to the funds. Equitable distribution looks at a number of elements, including how long the marriage has lasted, how old each partner is, their health, income, age, and earnings capacity. These are generally used to calculate a percentage of assets each spouse will walk away from the marriage with.

What Types of Retirement Funds Are Owned?

Retirement plans can be pension plans, which are referred to as defined benefit plans, or they can be defined contribution plans such as 401(k) plans, profit-sharing plans, and IRA accounts. The difference is important, as defined benefit plans are funded by employers during employment but aren’t received until after retirement, while contribution plans are funded by both the employer and the employee. The two are treated differently because of the difference in how they are funded and paid out.

For pension plans, the courts generally assess the plan’s value, divide it according to the equitable distribution factor, and then creates either am immediate offset that allows the pensioned employee to retain the plan in exchange for another asset or a deferred distribution for the non-employee spouse that is similar to the plan in place for the employee eligible for the benefit. This usually means that payments begin being distributed monthly when each reaches the age of 65. Another option is for the court to order the spouse scheduled to receive benefits o pay a portion to their ex when they start receiving them.

If the employee spouse’s employer has been contributing along with the employee to a 401K or similar defined contribution plan, the account holder is often ordered to take the percentage of the fund’s value dictated by the equitable distribution calculation and rollover that amount into an IRA, or to liquidate the entire amount to allow the proceeds to be divided. When an account needs to be divided in a divorce, the courts use a special order called a Qualified Domestic Relations Order, or QDRO, to ensure that rights are preserved and each spouse is treated fairly.

If you are concerned about the fair distribution of your assets in a divorce, our experienced attorneys can help. Contact us today to learn more about how your assets can be managed in a fair way, and all of the other challenging aspects of divorce.

What Happens if You Date During Your Divorce Proceedings?

Every divorce has its own reasons and rhythms, but in the end they’re all headed to the same resolution: the marriage is dissolved and each partner goes their own separate way. In light of this, many people want to move ahead and forward, even in the midst of divorce proceedings. For some, this means starting to date other people. But is that a good idea?

The question may seem like a legal one, but like so many other issues in divorce, the more important answer may skew towards the emotional impact of doing so.  Even in a no-fault state like Pennsylvania, where dating is unlikely to make a significant difference on the legal issues that need to be resolved, dating outside of the marriage is likely to have a “poking the bear” effect that will exacerbate and add unnecessary drama to every other issue that you’re confronting.

There are numerous factors that need to be evaluated before deciding to go out on a date. The most obvious ones have to do with minor children and finances. With reference to kids, you need to address whether going out on a date will interfere with your time spent with your children under any existing custody schedule, or whether trying to adjust your schedule to accommodate a date will be used against you. Your soon-to-be-ex may have an objection to the idea of introducing young kids to a new partner, or to having somebody new stay overnight.  Though the courts are unlikely to step in unless the new love interest is abusive or is in some other way a safety concern to the children or to either parent, dating will probably complicate your child custody negotiations.

The other issue that dating might have an impact on is equitable distribution, as it is entirely within your ex’s rights to question whether marital funds are being spent on wining and dining a new partner. If your split is going fairly well and both parties are eager to get it over with this is unlikely to create an issue. But if you are fighting over every nickel and dime or your spouse is feeling abandoned and replaced, you can be certain that pulling money out of a marital account to take a new interest away for a spa weekend is not going to sit well, and may even lead to a time-consuming discovery process or correspondence demanding that you reimburse however much you spent on the other person.

Dating during your divorce proceedings may be absolutely fine if you and your ex have already physically and legally separated, have an established child custody arrangement and have established separate bank accounts for your individual expenses. But if you’re still sharing the marital home or are in the midst of delicate, adversarial negotiations, you may want to think twice as to whether it’s worth the animosity and aggravation that it will inspire.

For more information on pursuing a divorce in Pennsylvania, contact our compassionate divorce attorneys to set up a time to meet.

The Difference between a Contested and Non-contested Divorce in Pennsylvania

In Pennsylvania, divorce proceedings are either “contested” or “non-contested.”  A contested divorce occurs when one person does not agree to the divorce or the parties cannot decide how to divide the marital property.  A contested divorce often leads to extensive court proceedings and high legal fees because the parties are forced to use the court to resolve their issues rather than coming to an agreement.  Going to court can be very expensive because attorneys charge not only for the time they are in the hearing, but also for the preparation beforehand.  The more combative the case, the higher the number of court hearings and legal fees.

A non-contested divorce gives people another option to the time consuming and expensive procedures of a contested divorce.  A non-contested divorce occurs when both people agree to get a divorce.  A non-contested divorce can be achieved quickly and cheaply when both people are on the same page.  In a non-contested divorce, if there is property from the marriage and the parties agree how it should be divided, the parties can simply create a settlement agreement with the help of an attorney to say who gets what and the agreement becomes part of the parties’ final divorce decree.

If there is no marital property and the parties are just looking to walk away from the marriage, a non-contested divorce can be finalized in less than six months and with minimal legal and filing fees.  If the parties have been separated less than a year, a mandatory 90 day waiting period applies before both parties have to sign documents agreeing to the divorce.  If the parties have been separated more than a year, then the waiting period can be reduced to 20 days with the agreement of both parties.

Our attorneys are available to help you figure out which option applies best to your situation.