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Handshake deals are a thing of the past

Posted by CM Whitener on September 11, 2013 at 2:10 PM Comments comments (0)



Are you a fan of Judge Mathis or The People’s Court? They are both shows that center on deals gone wrong. Each show has a disclaimer that identifies the authority under which these TV judges can make a ruling. Both Judge Greg Mathis and Judge Marilyn Milian have extensive legal backgrounds and serve as arbitrators for these cases.


An arbiter is different from a judge in that parties sign documentation agreeing to have their cases heard in a mediation style format where an arbiter makes the final legally binding decision. The parties get to agree to who the arbiter will be prior to entering into any agreement or after. A judge has cases assigned based on the jurisdiction he covers.


“The litigants are not actors…” is part of the disclaimer for The People’s Court. So these are ordinary people who find themselves having to battle before an arbiter often because they disagree on the terms of a handshake deal they’ve made. The typical litigants are landlords and tenants, lenders and borrowers, entertainment promoters and talent, or sellers and buyers.


The more aware litigant often brings a written document purporting to show the terms of the deal. Sometimes that document is insufficient and does not cover all that the two parties had spoken of when making the deal. So what happens then? The judge or arbiter can rely on some information outside of the document, depending on the type of agreement the parties have, but it is best practice to have all terms and contingencies hashed out and reduced to writing.


Documentation is key to running a successful business and/or entering into a successful deal. Yes, verbal contracts are legal, but there are certain agreements that must be in writing in order to be enforceable. Those types of agreements are covered by the Statute of Frauds.


The better practice is to always have written proof instead of relying solely on word of mouth evidence, specifically when you’re involved in a business venture. Not only will documentation provide proof in case of conflict, it will keep you organized and efficient. An efficient business is a productive business. A productive business is a successful business. A successful business is a profitable business.


Whether you have a business that employs multiple people or are a one person show, you need proper documentation to manage who you are and what you do. Employee guidelines, standard operating procedures, vendor contracts, volunteer applications, and company policies are necessary for most businesses. If you run a business or provide a service of any type, it is a best practice to consult with a professional and have your documentation in order.


Remember, what you say may be used against you, but what is signed can be your greatest defense.


If you have specific questions with respect to business related issues contact an attorney licensed in your jurisdiction. The information provided in this North Carolina law site blog is for educational purposes only.

 


 

Who gets the child tax credit?

Posted by CM Whitener on August 8, 2013 at 12:00 AM Comments comments (0)


"I am a non-custodial father that pays a non-court-ordered child support monthly. While drafting a child support agreement, me and the mother disagreed on who can claim the child. I requested we alternate years. She's of the opinion as she is the custodial parent, she HAS to be the one to claim her. Is there any truth to this?"


The question as to who has the right to claim dependents is one that arises often in co-parenting situations. Where one parent has primary physical custody and the other provides child support or the parties have joint legal and physical custody, the issue is often a murky one. 

The IRS has specific rules when it comes to guidelines for a "qualifying child of more than one person." Claiming a child for tax purposes comes with a number of tax benefits:

 

 

  • EITC,
  • Dependency exemption for the child,
  • Child tax credit,
  • Head of household filing status,
  • Credit for the child and dependent care expenses, and
  • Exclusion for dependent care benefits.

 

From the IRS:

Children of divorced or separated parents(or parents who live apart). In most cases, because of the residency test, a child of di­vorced or separated parents is the qualifying child of the custodial parent. However, the child will be treated as the qualifying child of the non­custodial parent if all four of the following state­ments are true.

1. The parents:

a. Are divorced or legally separated un­der a decree of divorce or separate maintenance,

b. Are separated under a written separa­tion agreement, or

c. Lived apart at all times during the last 6 months of the year, whether or not
they are or were married.

2. The child received over half of his or her support for the year from the parents.

3. The child is in the custody of one or both parents for more than half of the year.

4. Either of the following statements is true:

a. The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a de­pendent for the year, and the noncus­todial parent attaches this written dec­laration to his or her return. (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or separation agreement, later. If the decree or agreement went into ef­fect after 2008, see Post-2008 divorce decree or separation agreement, later.)

b. A pre­1985 decree of divorce or sepa­rate maintenance or written separa­tion agreement that applies to 2012 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the non­custodial parent cannot claim the child as a dependent, and the non­custodial parent provides at least $600 for the child's support during the year.

The IRS further provides tests to determine what level of support a parent provided during the taxable year. (Page 15 of this document has a worksheet to determine your level of support.).  If a noncustodial parent meets the special rules for a shared child, he (or she), may claim the child for certain specific tax purposes (an ex­emption and the child tax credit), but not those with a residencey requirement such as head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit.

Waiver

The custodial parent has the presumptive right to claim tax benefits of a qualifying child. However, those rights may be waived for a specific tax year or multiple tax years with form 8332: Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent



If you have specific questions with respect to child custody and child support issues contact an attorney licensed in your jurisdiction. The information provided in this North Carolina law site blog is for educational purposes only.