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Many Americans face wage garnishment

In the United States, one out of every 14 workers is having his or her wages garnished according to ADP Research. California residents and others were most likely to have wages garnished to pay back child support. Overall, child support garnishments made up 3 percent of all garnishments, and they were the most common type of garnishment of those studied by ADP. The study also looked at garnishment related to bankruptcy, tax debt and other common scenarios.

Nationally, there were 1.4 obligations per each worker who had his or her wages garnished. Of those who had their wages garnished, 71 percent were male, and those were mostly related to child support payments. Furthermore, 62 percent of workers who had their wages garnished were between the ages of 35 and 54. Those who worked at smaller companies were less likely than those working at larger companies to have their wages garnished.

Divorce may lead to a change in filing status

Among other changes after a divorce, California couples who are ending their marriage may find that their tax situation is different. For instance, an individual who gets divorced during the current calendar year will usually file single. This is true regardless of how much time he or she spent married during that year. It may be important for parents to determine who will have access to the child tax credit as well as the dependent credit.

The dependent credit is worth $4,050 per child, but only one parent can claim it. In most cases, the custodial parent is the one who gets it. However, it is possible for noncustodial parents to be given that credit. If a noncustodial parent does claim that credit, both parents will need to fill out Form 8332, and the noncustodial parent will need to file it with his or her tax return.

Family Law in California

When children in California have two different sets of rules to abide by, they may constantly feel on guard to avoid getting in trouble. It would be especially difficult to find common ground if the two sets of rules contradicted each other. This can be precisely what children experience when divorced parents share custody and have two separate versions of house rules.

If the rules of the two houses contradict each other too much, it can be downright confusing for children to keep up with. The most important thing that children need is a semblance of order, constancy, structure, and predictability. In contentious divorces, even the rules parents make for their children can become a battleground, and the same spite that comes out in struggles over who gets what can emerge in laying down the law at home.

What to consider before going to mediation

When a couple chooses to get a divorce, mediation may be a civilized method of accomplishing that goal. This may be especially useful for California residents who have children. However, it may be a good idea for anyone considering mediation to learn more about what this process entails. Doing so many increase the odds that mediation meets a person's needs in a family law matter.

Individuals are urged to prepare emotionally for mediation as they may feel sad, angry or frustrated about their current situation. Mediation may also present an opportunity to speak openly for the first time in years, which could increase the chances of a person getting emotional. It is important to have specific facts and numbers if the issue is related to property or other financial matters. For instance, it may be worthwhile to know exactly how much each party made in a given year or how much an item was appraised for.

Financial challenges for women after divorce

California residents whose marriages are ending may have a lower standard of living after the divorce. Often, this happens to women because they still make less than men do at around 82 cents to the dollar. The gap is even greater in certain fields or with other variables. There are a number of reasons for this including the likelihood that caregiving duties will fall to women, and this means they may work part time, have less chance for career advancement and save less money.

It is important for the person in a divorce who has made less money to prepare financially. Knowledge is one part of these preparations. A person who is largely unacquainted with the family finances might want to take a class or consult a professional to better understand how to plan a budget and set financial goals. The person will need to consider expenses, income, assets and goals in making a financial plan for after the divorce.

The family home in a divorce

California residents who are getting a divorce may want to refinance the family home in order to keep it or get a new mortgage. They should think about a number of financial factors including whether it is possible to buy out the other spouse, whether alimony and child support are being paid or received, and whether there is enough money for a down payment.

People who are divorced may face additional challenges when it comes to getting a mortgage. Their credit rating may be damaged during the divorce if they fall behind on bills. Furthermore, some forms of income may only be counted by lenders if they have continued for a certain amount of time. For example, most lenders will expect several months of alimony payments before counting it as income. Bonuses, commission-based income and part-time income may all be required to appear on two years of tax returns.

Life changes and child support modification

A California parent who has gone through a divorce and who has been ordered to pay child support may seek a modification for a number of reasons. An injury, losing a job, a change in household income or a change in marital status could all be reasons that result in the need for child support modification. It is important for a parent who needs a modification in child support to avoid procrastinating. Child support modifications are rarely retroactive, and back child support payments cannot be discharged in bankruptcy.

A parent might want to seek legal advice to find out what constitutes a situation that would allow for a child support modification. If the other parent agrees, this could make the process easier since it means litigation will not be necessary. Parents who are not in agreement may be able to reach one using mediation.

Divorce and 401(k)s

Employee retirement plans like 401(k) plans are usually not co-owned with a spouse. However, couples in California who are planning to get a divorce should understand how a 401(k) can be treated when a marriage ends.

Under certain conditions, the retirement account can be split between the two divorcing parties, even if the 401(k) was opened before the marriage began. The Internal Revenue Code and the Employee Retirement Income Security Act of 1974 dictate which requirements will have to be met.

Rules for claiming alimony payments as tax deductions

California residents who pay alimony should be aware of the rules for deducting support payments from taxes. For example, a U.S. Tax Court ruled that alimony payments cannot be claimed as deductions if they are not included in the original divorce or separation agreement. In addition, alimony is not deductible if the parties live in the same household or have a separation agreement specifying that the support payment is not taxable in some way.

The decision on including alimony in the divorce or separation agreement came after a man who divorced in 2007 claimed a bonus he split with his wife as an alimony deduction. The man earned the bonus in 2006 and filed for divorce in 2007. After filing but before the divorce was finalized, the man and his wife signed an agreement regarding the bonus. A later spousal support order included terms for temporary support, but it did not mention the bonus.

Financially preparing for a divorce

California residents who are considering getting a divorce might be concerned about how to prepare financially before starting the process and how to plan for the post-divorce future. While settling financial issues can be a delicate process, with proper planning ahead of time, it can be managed.

Financial planning should begin as soon as couples realize they are headed for this type of separation. They should begin tracking finances, including costs for holiday, repairs, and other big expenses, as well as the day-to-day bills and expenses. This information can be used by both lawyers during settlement negotiations and by a judge to later determine such things as child support.

Gavin & Dersch Law and Mediation

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    Attorneys Paul Gavin and Wayne Dersch are certified as a family law specialists. Learn More