After Father filed for divorce in 2014, the family court entered temporary orders for Father to pay $500 per month in spousal maintenance and $950 per month for child support. Later, when the divorce decree was entered, the court changed Father’s child support obligation to $861 and allocated the tax dependency exemptions to each parent.
In May 2018, Mother filed a petition to enforce child support, spousal maintenance, and the tax dependency provisions of the decree. Father admitted he owed “some” arrearages and the court ordered the Family Court Conference Center to calculate the amount. It reported that Father owed $16,133.45 for child support plus $3,069.79 of interest, and $16,299.83 for spousal maintenance plus $3,210.09 of interest.
Because these amounts excluded support Father owed but failed to pay pursuant to the temporary orders, the court ordered another calculation. This time it reported Father owed $28,427.45 for child support plus $8,604.16 of interest, and $22,799.83 for spousal maintenance plus $6,624.10 of interest.
The court overruled Father’s object to the inclusion of the support owed under the temporary orders and entered a child support judgment for $37,031.61 and spousal maintenance judgment for $29,423.93. The court further determined that because Father was in arrears, he wrongfully claimed tax dependency exemptions for 2015, 2016, and 2017.
As a brief tangent, tax dependency exemptions or child tax credits are assigned proportionately according to the parents’ incomes pursuant to the Arizona Child Support Guidelines. When a parent owes child support, the parent must pay all support owed, including payments ordered toward arrearages, for the calendar year the parent intends to claim the tax exemptions or credits allocated to that parent. If the parent who owes child support failed to pay all of that year’s support by December 31 (or the following pay period, if subject to an income withholding order), the other parent may claim the tax benefits.
Back to this case, the family court ordered Father to pay to Mother $1,500 for each of the six tax exemptions he improperly claimed and entered another judgment against Father.
Pursuant to Rule 47(j) and A.R.S. § 25-315(F), temporary orders terminate upon entry of final orders unless the final orders specify otherwise. Father cited to these authorities on appeal when he successfully argued that the family court erred by including temporary support in its arrearage judgment.
The Court of Appeals agreed and explained that final decrees must include arrearage calculations for temporary support in order to preserve the enforceability of the temporary orders. If a court fails to do so, the recipient party must timely request relief from the decree or file an appeal.
Support Judgment Interest
When the family court entered judgments for child support and spousal maintenance, it combined the respective principal and interest into one sum. By doing this, the court inadvertently ordered compound interest. Under Arizona law, judgments are subject to simple interest only. Accordingly, the Court of Appeals reversed the arrearages judgments and ordered recalculation of the principal and interest amounts.
Tax Exemptions and Interest
Father also argued that the family court erred by entering the $9,000 judgment as a sanction for improperly claiming the tax exemptions. He argued that the court should have determined the “actual benefit” Mother lost by being unable to claim the children. But on appeal Father failed to provide a transcript of the proceedings. When this happens, the Court of Appeals presumes the missing portions of the record support the family court’s conclusions.
Finally, Father argued that the family court erred when it ordered the judgment related to the tax exemptions to accrue interest at ten percent. Pursuant to A.R.S. § 25-510(E), ten percent is the statutory interest rate for support judgments while A.R.S. § 44-1201(B) provides that other judgments are subject to the lesser of ten percent or prime plus one percent, unless specified by another statute. So the question here was whether the judgment entered to cure the tax exemption issue should be characterized as support. The Court of Appeals affirmed and explained that even though the tax dependency exemption does not fit precisely within the definition of support provided in A.R.S. § 25-500(9), the context supports the family court’s application of the interest rate statutorily provided for support judgments.