Dallas Divorce Law Blog by Michelle O'Neil

In a July 31, 2009 opinion by the Dallas Court of Appeals, it was confirmed that Federal law trumps Texas law when it comes to income tax issues.  In In re S.L.M., the mother brought child custody proceedings against father.  The district court appointed mother and father as joint managing conservators and awarded mother the right to claim the children as exemptions on her federal income tax return. On appeal, father contended the district court erred in awarding mother the right to claim the two children as tax exemptions.  In re S.L.M., ___ S.W.3d ___, No. 05-08-01277-CV, 2009 WL 2343264 (Tex. App. – Dallas July 31, 2009, no pet. h.).

The Dallas Court of Appeals held the district court erred in awarding mother the exemption rights and examined tax exemptions under the United States Internal Revenue Code.  In computing taxable income, a taxpayer is permitted to claim dependents as exemptions and the exemption is awarded to the custodial parent as the parent having custody of the child for the greater portion of the calendar year.  Id. at Sect. 152(e)(4).

When applying the pertinent provisions of the tax code to the facts, the court determined that father had greater periods of possession that mother and as such, should have the right to count the children as exemptions on his tax return.  As a Dallas divorce lawyer it is important to stay on top of not only family law developments but developments in other areas that impact family law.