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In re Marriage of Watkins

Court of Appeals of Illinois, Third District

December 14, 2017

In re MARRIAGE OF ADAM WATKINS, Petitioner-Appellant, and STACY WATKINS, Respondent-Appellee.

         Appeal from the Circuit Court of the 10th Judicial Circuit, Marshall County, No. 12-D-23 Illinois. Honorable Michael P. McCuskey, Judge, presiding.

          JUSTICE CARTER delivered the judgment of the court, with opinion. Justices McDade and O'Brien concurred in the judgment and opinion.

          OPINION

          CARTER JUSTICE

         ¶ 1 This is appeal arises from the trial court's interpretation of an agreed order entered by the trial court on November 25, 2015, concerning which party-the petitioner, Adam Watkins, or the respondent, Stacy Watkins-had the right to claim the parties' two children as tax exemptions for the 2015 tax year on tax returns that were filed in 2016. The agreed order modified a previous order that had allowed Stacy to claim the children on her tax returns on a yearly basis. On appeal, Adam requests that this court reverse the trial court's finding that the agreed order allowing him the right to claim the children as tax exemptions did not apply until the 2016 tax year (for tax returns filed in 2017). We reverse the trial court's finding and remand for any further proceeding necessary as a result of our opinion.

         ¶ 2 FACTS

         ¶ 3 On June 19, 2004, the parties were married. At that time, they had a three-year-old son, who had been born on November 5, 2001. Their second son was born on April 18, 2005. After eight years of marriage, on July 6, 2012, Adam filed a petition for dissolution of marriage. On November 14, 2012, a final judgment of dissolution of marriage was entered in this case, which incorporated, by reference, a "Final Order on Custody and Child Related Issues and Joint Parenting Agreement" and indicated that the "[s]aid Final Order on Custody and Child Related Issues and Joint Parenting Agreement is a final order on said issues."

         ¶ 4 According to the "Final Order on Custody and Child Related Issues, " entered by the trial court on November 14, 2012, the parties were granted shared joint legal custody of the children, with Stacy designated as the residential parent and Adam ordered to pay $950 per month in child support. The order specifically indicated, "Stacy shall be allowed to claim both minor children as tax exemptions in the filing of her state and federal income tax returns on a yearly basis."

         ¶ 5 On March 6, 2015, Adam filed a verified petition for temporary relief. The petition indicated that the parties' child custody order of November 14, 2012, allowed Stacy to claim the dependent tax exemption for the parties' two minor children on her tax returns on a yearly basis and requested that the trial court "address the issue of the tax exemption[s] before the parties file[d] their 2014 income tax returns." Adam requested that "each party be allowed to claim one (1) child as a dependent on their income tax returns annually." With the filing of his verified petition for temporary relief, Adam filed a notice of hearing and proof that his petition had been served upon Stacy on February 16, 2015.

         ¶ 6 On March 6, 2015, Stacy filed a petition to modify child support and a response to Adam's petition for temporary relief. In her response to Adam's petition, Stacy argued as follows:

"This [trial] court is without authority to retroactively change the allocation of the dependency exemptions for 2014 in response to [Adam's] petition for Temporary Relief which has been filed on or about February 17, 2015. Instead, this court would have authority, pursuant to this Petition, to address the income tax dependency exemption issue for calendar year 2015 and thereafter." (Emphasis added.)

         ¶ 7 At a hearing on September 28, 2015, at which the parties entered an agreed order as to parenting time, Adam's attorney indicated that the parties had not reached an agreement as to the modification of child support. Adam's attorney indicated that Stacy's earnings plus her receiving $1000 per month in child support from Adam meant that Adam's net pay, after child support, was getting close to Stacy's net pay, with Adam never having had a single tax deduction for the children. Adam's attorney indicated that Adam was requesting both tax deductions for the children.

         ¶ 8 The trial court clarified, "[n]ow we are talking about the tax exemption for two kids for 2015 that are going to be filed no later than April 15 of 2016." Stacy's counsel responded, "[c]orrect." Stacy's counsel explained that the parties had initially agreed in their negotiations for modification of child support to each claim one child and then alternate when there was only one applicable child to claim as part of the "total agreement, " but then "that last part fell apart." Stacy's counsel indicated that Stacy was willing to divide the exemptions equally, but Adam's position was that because Stacy claimed the children for the past three years he should be able to do the same for the next three years.

         ¶ 9 With interjections from the attorneys at times, which are not included here, the trial court indicated:

"Well, I think it is real simple. And that is that his child support should be based on 28 percent of his average annual income. And that's looking back obviously, or you can do it in April of each year after you have got the tax return so that you can either come in on a modification, it would be nicer to have an agreement, that you're going to adjust it annually in April after the tax return, 28 percent. If he's paying 28 percent at this level of $1, 000 a month or more, I think he's entitled to the two tax exemptions.
* * *
And that's the way I would rule if you were in front of me at a contested hearing in April of 2016. I would be adjusting the child support at that time based on his 2015 income and consider it a substantial change because we are talking about bonuses. *** Who knows what that is going to be in the future.
** *
Well, I'm talking about if he came in for a modification. I don't have authority to change anything in the past because there [are] no pleadings in front of me. But I'm telling you how I would rule if there were pleadings in front of me based on the fact that he is paying approximately $12, 000 or more in child support of which he doesn't get to deduct it.
*** I think if he is paying current, which this Court doesn't see a lot of currency, 28 percent including bonuses that the total ends up $1, 000 or more a month, he's entitled to both exemptions.
** *
I would like to see the two of you work on that order. I'm going to be here next year. So that's what I would be doing if you were back here in April. It would be a lot nicer just to ...

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