I get to claim my daughter on taxes this year. If I have a defaulted student loan can they garnish my taxes?

Question

I live in minnesota. I pay child support and am up-to-date on my payments. During the divorce the judge said that if I was up-to-date on my payments then I could claim my daughter on income taxes. I have a garnishment on my student loans can they take my tax money?

Answer 1

From what you say, the wording of your divorce decree does NOT meet the requirements laid out in Federal law to take the exemption. Unless you are the custodial parent, you can NOT use that as the basis to claim the exemption. Federal law is VERY specific on this and if you use that decree as the basis for your claim of the exemption for the child the IRS is required by law to ignore the decree and award the exemption to the custodial parent. Given that this law has been in effect for over 20 years, it's depressing that state judges and divorce attorneys would allow such language to be placed in a divorce decree. If you ARE the custodial parent, no harm, no foul. However if you are NOT the custodial parent the IRS will disallow the exemption claim if the custodial parent also claims the child.

The ONLY way around this if the decree is worded that way is for the court to require the custodial parent to execute Form 8332 or a similar statement giving you the exemption. Courts DO have the authority to order the other parent to complete that form and can hold them in contempt if they fail or refuse to do so.

As to the issue of defaulted government insured student loans, any refund can and probably will be captured and be applied against the loan balance.

Answer 2

If you are due a refund, the answer is yes. Still, the higher refund amount will go to pay off the student loans faster.

To avoid further problems, make sure you actually are entitled to claim the child as a dependent. I often see divorce instruments which do not meet IRS requirements in that regard. I cannot understand why divorce lawyers can't get the wording right in that regard, but it does have to potential to cause problems for both spouses.

As a technical note, when referring to tax refunds the word offset is used rather than garnish.

Answer 3

while you're due a reimbursement, the respond is confident. nonetheless, the better refund volume will circulate to pay off the pupil loans quicker. to stay away from added issues, be sure you easily are entitled to declare the new child as a based. I in many cases see divorce contraptions which do no longer meet IRS standards in that regard. i won't comprehend why divorce attorneys can not get the wording perfect in that regard, in spite of the undeniable fact that it does ought to ability to reason issues for the two spouses. As a technical notice, while pertaining to tax refunds the word offset is used extremely than garnish.

Answer 4

Yes, they'd still take any refund toward your student loan debt. But by claiming your daughter, your refund would be bigger, so you'd get it paid down more than if you didn't claim her, and get out of this debt faster.