In re the Matter of: Birch Benjamin Hansen v. Suzanne Christine Todnem ( 2017 )

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-0698
In re the Matter of: Birch Benjamin Hansen, petitioner,
Appellant,
vs.
Suzanne Christine Todnem,
Respondent.
Filed February 13, 2017
Affirmed
Hooten, Judge
Ramsey County District Court
File No. 62-FA-14-371
Thomas B. James, Law Office of Thomas B. James, Cokato, Minnesota (for appellant)
Suzanne Christine Todnem, St. Paul, Minnesota (pro se respondent)
Considered and decided by Peterson, Presiding Judge; Hooten, Judge; and Smith,
John, Judge.
SYLLABUS
I. When parents have a monthly combined parental income for child support
(PICS) over $15,000, Minnesota Statutes section 518A.35, subdivision 1(e) (2016), does
not require that the combined PICS be capped at $15,000 in order to calculate the presumed
basic child support obligation.

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
II. While a district court may modify a parenting time arrangement if the
modification is in the best interests of the child, the district court need not make explicit
findings on all the best interests factors listed in Minnesota Statutes section 518.17,
subdivision 1(a) (2016), if the proposed modification is insubstantial or a mere
clarification.
III. For purposes of calculating a parent’s medical support obligation, the district
court does not abuse its discretion by evaluating a medical insurance policy’s deductibles
and co-payments, in addition to monthly premium costs, when considering the policy’s
affordability.
IV. The federal tax code does not prohibit the district court from allocating the
federal dependency exemption to an unmarried parent who is not able to claim head of
household status that taxable year.
OPINION
HOOTEN, Judge
In this dispute regarding child support, child care, and child-related tax benefits,
appellant father argues that the district court (1) erred by failing to apply a $15,000 statutory
cap to the parents’ monthly combined PICS; (2) abused its discretion by denying
appellant’s request to provide in-home, before and after school child care; (3) erroneously
determined that the child would be covered under respondent mother’s medical insurance
policy; and (4) exceeded its authority in allocating the federal dependency exemption to
the parent who is not entitled to claim head of household status. We affirm.
2
FACTS
Appellant Birch Benjamin Hansen and respondent Suzanne Christine Todnem are
the parents of K.T. (the child), born in 2010. The parents, who never married, separated
when the child was less than two months old, resulting in Todnem becoming the child’s
primary caretaker. Initially, Hansen voluntarily paid Todnem $1,000 per month in basic
child support, two-thirds of the child care costs, and $99.91 per month for the child’s
medical insurance coverage. In January 2014, Hansen petitioned for a determination of
custody, parenting time, and child support. The district court issued an order awarding
Todnem temporary sole legal and temporary sole physical custody and directing Hansen
to continue paying the same child support obligations that he previously volunteered.
In March 2015, a custody evaluation report recommended that the district court
award the parties joint legal and joint physical custody along with equal parenting time,
and that the district court appoint a parenting consultant. Approximately four months later,
the parties finalized a comprehensive parenting plan that mirrored the custody evaluator’s
recommendations and met the elements outlined in Minn. Stat. § 518.1705, subd. 2(a)
(2016). The district court adopted the parenting plan, which also allowed for a parenting
consultant to determine the child’s elementary school for the 2015 academic year. The
parenting consultant chose a school located less than one-half mile from Hansen’s
residence.
Within weeks of the district court’s adoption of the parenting plan, disputes arose
between the parties regarding child support, child care, and child-related tax benefits. The
district court issued an order in October 2015, determining that the parties’ combined PICS
3
was $16,8681 and concluding that there was no statutory cap for the PICS. Based on these
determinations, the district court required Hansen to pay $424 per month in basic child
support. The district court also denied Hansen’s before and after school daycare request,
finding that his request was not in the child’s best interests. The district court found that
although Hansen’s monthly medical insurance costs were less than Todnem’s monthly
costs, Todnem’s policy was preferable because her deductible was $150 while his
deductible was $3,000.2 The district court therefore ordered Hansen to pay $83 per month
for medical support.
The district court initially allocated to each parent the right to claim all child-related
tax exemptions, credits, and deductions in alternating years. But, because both parties
moved to amend the district court’s order, the district court amended its order to reverse
the issue for resolution at an evidentiary hearing. At the hearing, Hansen claimed that he
was entitled to claim the child exclusively for all tax-related benefits (dependency
exemption, head of household status, child tax credit, and child and dependent care credit)
because the child spends an equal amount of time with both parents and Hansen has a
higher adjusted gross income than Todnem. The district court disagreed with Hansen and
decided that the tax benefits should be allocated between Hansen and Todnem each year.
In an effort to ensure that both parents would receive some tax benefit each year, the district
1
The district court later recalculated the combined PICS to be $16,624.
2
The district court noted that because of employer and employee contributions, Hansen’s
deductible may be reduced to $1,450.
4
court ordered that the parent who did not qualify for the head of household status for a
given year be entitled to claim the dependency exemption. Hansen appeals.
ISSUES
I. Did the district court err by failing to apply a $15,000 statutory cap to the
parties’ combined PICS in its child support calculation?
II. Did the district court abuse its discretion by denying Hansen’s request to
provide in-home child care during before and after school hours?
III. Did the district court err in determining that Todnem, rather than Hansen,
maintain the child under her medical insurance policy?
IV. Did the district court err in allocating the dependency exemption to the parent
who was not entitled to claim head of household status for that particular year?
ANALYSIS
I.
Hansen argues that the district court miscalculated his basic child support obligation
by failing to limit the parents’ combined PICS to $15,000. Generally, the district court has
broad discretion in determining a parent’s child support obligation. Rutten v. Rutten, 347
N.W.2d 47, 50 (Minn. 1984). But, the district court abuses its discretion if the support
obligation goes against the facts in the record or if the district court misapplies the law. Id.In computing a parent’s child support obligation, the district court combines the
parents’ gross monthly income to arrive at the PICS and determines each parent’s
percentage contribution to the combined PICS. Minn. Stat. § 518A.34 (2016). Here, the
district court calculated the parents’ combined PICS as $16,624 and determined that
Hansen’s income made up 65% of the PICS. The district court did not apply a $15,000
cap to the parents’ combined PICS, explicitly finding that “there is no cap on the combined
5
parental income under the [c]hild [s]upport [g]uidelines.” The district court then limited
the basic support obligation to the $1,883 statutory cap, pursuant to the child support
guidelines, and adjusted Hansen’s obligation to account for his equal parenting time. See
Minn. Stat. §§ 518A.35, subd. 2, .36 (2016). As a result, Hansen’s basic child support
obligation was set at $424 per month.
Hansen specifically argues that the district court should have limited the parties’
combined PICS to $15,000, and in doing so, reduced Hansen’s gross monthly income from
$10,728 to $9,104. Minn. Stat. § 518A.35, subd. 1(e), states:
For combined [PICS] exceeding $15,000 per month, the
presumed basic child support obligations shall be as for parents
with combined [PICS] of $15,000 per month. A basic child
support obligation in excess of this level may be demonstrated
for those reasons set forth in section 518A.43.
If a statute’s language is clear, this court will interpret the language and discern the
legislature’s intent according to the plain and the common sense meaning of the words.
State ex rel. Gardner v. Holm, 241 Minn. 125, 129, 62 N.W.2d 52, 55 (1954). The plain
meaning of section 518A.35, subdivision 1(e), is that if the parents’ combined PICS is over
$15,000, the presumed basic child support obligation, not the parents’ combined PICS, is
capped. In this case, the combined basic child support obligation is capped at $1,883, the
presumed guideline amount for one child when the parents’ combined PICS is $15,000 or
over. Minn. Stat. § 518A.35, subd. 2.
Hansen’s interpretation of the statute would lead to an unfair and absurd result
because there is no reasonable explanation for why any combined income in excess of
$15,000 should only reduce the amount of his income that is calculated into the combined
6
PICS and thereby reduce his PICS percentage to the detriment of Todnem. See Minn. Stat.
§ 645.17(1) (2016) (“[T]he legislature does not intend a result that is absurd, impossible of
execution, or unreasonable.”). Despite Hansen’s assertion to the contrary, there is a logical
reason to use a combined PICS over $15,000 as it allows the district court to accurately
calculate the percentage that each parent contributes to the PICS. Under these
circumstances, the district court properly applied the statute and did not abuse its discretion
in determining that the parents’ combined PICS was $16,624 with a combined basic child
support obligation of $1,883. Hansen’s child support, which was calculated on this
combined basic child support obligation, is in accordance with the child support guidelines.
II.
Hansen next claims that the district court abused its discretion by denying his
request to provide in-home child care during before and after school hours. Because the
district court considered, and Hansen argues on appeal, that this is an issue regarding the
parties’ parenting time, we analyze the issue through the lens of a typical parenting time
modification. The district court has broad discretion in resolving parenting time questions
based on the child’s best interests, and we will not reverse its decision absent an abuse of
discretion. Olson v. Olson, 534 N.W.2d 547, 550 (Minn. 1995).
After several months of difficult negotiations, the parties executed a parenting plan
in which they agreed to joint legal and joint physical custody and equal parenting time with
the child on a regular parenting time schedule. The parties also authorized a parenting
consultant to select the child’s elementary school. The parenting consultant selected a
school located less than one-half mile from Hansen’s residence. Hansen argued that he
7
could provide care for the child before and after school during what would be Todnem’s
scheduled parenting time. Hansen asserted that his request would benefit the child because
he can work remotely from home and this arrangement could therefore give him additional
parent-child contact and would decrease the parents’ child care expenses. 3 Todnem
opposed Hansen’s request, preferring that the parties utilize the school’s daycare program
during her parenting time.
The district court framed Hansen’s request as an alteration of the parenting time
schedule and noted that he made his request only one month after agreeing to the parenting
plan. The district court determined that Hansen did not offer any compelling reason why
parenting time should be modified and failed to show that his proposal was in the child’s
best interests. The district court provided reasons why Hansen’s request was not in the
child’s best interests, including: (1) the arrangement would continue the conflict between
the parents regarding parenting time after they had spent much time and effort to agree to
a parenting plan; (2) it would increase the amount of interaction between the parents and
thus heighten the risk of additional conflict; and (3) Hansen’s inconsistent availability to
3
In his motion, Hansen cited Minn. Stat. § 518.175, subd. 8 (2016), which explains, “The
court may allow additional parenting time to a parent to provide child care while the other
parent is working if this arrangement is reasonable and in the best interests of the child, as
defined in section 518.17, subd. 1,” and includes three additional factors that the district
court “shall” consider. While the statute provides a number of considerations other than
the best interests factors that a district court must evaluate in making this determination,
Hansen’s argument focuses primarily on the sufficiency of the district court’s findings
regarding the best interests factors listed in Minn. Stat. § 518.17, subd. 1(a). For the
reasons stated below, we conclude that the district court did not abuse its discretion in
making its findings.
8
provide care would force the parents to make alternate arrangements that would disrupt the
child’s stability and schedule.4
A. Best Interests Factors
Hansen claims that the district court erred by failing to evaluate his motion for
additional parenting time under the best interests factors set forth in Minn. Stat. § 518.17,
subd. 1(a). It is well-established that a court’s analysis of parenting time disputes focuses
on what is in the best interests of the child. Clark v. Clark, 346 N.W.2d 383, 385 (Minn.
App. 1984), review denied (Minn. June 12, 1984). Generally, modification of a parenting
plan or parenting time order is governed by Minn. Stat. § 518.175, subd. 5 (2016), which
provides that a modification decision must “serve the best interests of the child,” but does
not explicitly require a district court to make particularized findings on all the best interests
factors enumerated in Minn. Stat. § 518.17, subd. 1(a). Hansen’s request to care for the
child during before and after school hours during Todnem’s scheduled parenting time has
minimal effect, either in adding significant parenting time to Hansen or in decreasing the
time that Todnem spends with the child on a regular basis. “Mere clarifications or
insubstantial modifications of a [parenting time] schedule are within a [district] court’s
discretion and need not be supported by findings that such modification is in the children’s
best interests.” Funari v. Funari, 388 N.W.2d 751, 753 (Minn. App. 1986).
4
The district court provided the additional reason suggesting that institutional daycare may
be preferable to in-home, parental care. To avoid speculating as to the quality of care that
either the child’s school or Hansen may provide, we will not consider this reason as part of
our analysis.
9
Traditionally, Minnesota caselaw has treated requests for insignificant changes and
clarifications to parenting time differently than substantial modifications. See Anderson v.
Archer, 510 N.W.2d 1, 4 (Minn. App. 1993). A district court may decide minor parenting
time changes and adjustments using its discretion and need not support its decision with
specific findings, while significant changes “must be supported by findings that the
modifications are in the best interest of the children.” Chapman v. Chapman, 352 N.W.2d
437, 441 (Minn. App. 1984); see also Funari, 388 N.W.2d at 753. Generally, in order to
make sufficient findings in matters concerning substantial parenting time modifications,
the district court must hold an evidentiary hearing to determine whether a modification is
in the child’s best interests. Matson v. Matson, 638 N.W.2d 462, 468 (Minn. App. 2002);
cf. Braith v. Fischer, 632 N.W.2d 716, 721 (Minn. App. 2001) (stating insubstantial
modification does not require evidentiary hearing and is appropriate if modification serves
child’s best interests), review denied (Minn. Oct. 24, 2001).
In 2015, the legislature revised the best interests factors. 2015 Minn. Laws ch. 30,
art. 1, § 3, at 271–72. Not only did the revised version of Minn. Stat. § 518.17, subd. (1)(a),
alter the factors themselves, it also made explicit the applicability of the factors to matters
regarding parenting time. The statute now provides that in resolving parenting time issues,
the district court must consider all relevant factors, including the enumerated factors, make
detailed findings on each factor, and explain how each factor ultimately led to its
conclusion. Minn. Stat. § 518.17, subd. (1)(a)–(b) (2016). But the statute does not
distinguish between the different types and degrees of parenting time issues. Minnesota
courts have “long presumed that statutes are consistent with the common law, and if a
10
statute abrogates the common law, the abrogation must be by express wording or necessary
implication.” Brekke v. THM Biomedical, Inc., 683 N.W.2d 771, 776 (Minn. 2004)
(quotation omitted); see Putz v. Putz, 645 N.W.2d 343, 351 (Minn. 2002) (“[S]tatutes are
not to be construed in derogation of well-established principles of the common law or
equity unless such a construction is required by the express words of the statute or by
necessary implication.”).
We believe that the language of Minn. Stat. § 518.17, subd. 1(a)–(b), does not
abrogate the principle, rooted deeply in our caselaw, that decisions regarding insubstantial
modifications or clarifications of parenting time are within the district court’s discretion
and need not be supported by particularized findings on all of the statute’s best interests
factors. Therefore, under these circumstances in which a minimal change in parenting time
is at issue and where the district court’s decision was supported by a number of best
interests findings, we conclude that the district court did not abuse its discretion simply
because it did not make explicit best interests findings on all the enumerated factors listed
in Minn. Stat. § 518.17, subd. 1(a).
B. Sufficiency of the Findings
Hansen also asserts that the findings that the district court did make are not
supported by the evidence. We disagree. “A district court’s findings of fact underlying a
parenting-time decision will be upheld unless they are clearly erroneous.” Newstrand v.
Arend, 869 N.W.2d 681, 691 (Minn. App. 2015) (quotation omitted), review denied (Minn.
Dec. 15, 2015). “A finding is clearly erroneous if we are left with the definite and firm
11
conviction that the [district] court made a mistake.” SooHoo v. Johnson, 731 N.W.2d 815,
825 (Minn. 2007).
Hansen first alleges that the district court unreasonably denied his request and
improperly construed it as an “end run” around the parenting plan. Hansen notes that the
parenting consultant did not select the school until after the parties had agreed to the
parenting plan. However, the parents were well aware that child care would likely be
needed, and the parents had used daycare programs in previous years.
While Hansen acknowledges that the district court was correct in its finding
regarding his occasional inability to provide child care before school, he alleges that the
district court erred in finding that his request would prevent the parties from establishing a
stable routine for the child. But, the record supports the district court’s concern that
Hansen’s availability to provide care before school would require the parties to make other
arrangements that would likely disrupt the child’s established routine and schedule. The
record also supports the district court’s finding that the parties had difficulty agreeing to a
parenting plan. Therefore, it was reasonable for the district court to highlight that Hansen’s
request could increase the interaction and the potential for conflict between the parents.
Under these circumstances, the district court did not clearly err in denying Hansen’s request
to provide child care during before and after school hours.
III.
Hansen contends that the district court abused its discretion by determining that
Todnem, rather than Hansen, was responsible for covering the child under her medical
insurance policy, and thus requiring Hansen to pay a greater monthly amount in medical
12
support. “Medical support” is defined as “providing health care coverage for a joint child
by carrying health care coverage for the joint child or by contributing to the cost of health
care coverage, public coverage, unreimbursed medical expenses, and uninsured medical
expenses of the joint child.” Minn. Stat. § 518A.41, subd. 1(d) (2016). As a child’s medical
support is part of child support, this court will not reverse a district court’s decision
regarding a parent’s support obligation absent an abuse of discretion. Casper v. Casper,
593 N.W.2d 709, 714 (Minn. App. 1999).
Because the parties agreed that their medical insurance policies provided
comparable coverage, we must decide whether the district court properly exercised its
discretion in finding Todnem’s policy to be more affordable. See Minn. Stat. § 518A.41,
subd. 3(4) (2016) (“If both parents have health care coverage available for a joint child that
is comparable with regard to comprehensiveness of medical benefits, accessibility, and the
joint child’s special needs, the least costly health care coverage is presumed to be the most
appropriate health care coverage for the joint child.”). The district court found that
Hansen’s medical insurance for the child costs $64 per month while Todnem’s costs $127
per month. But, the district court also found that Hansen’s deductible was $3,000, which
could be reduced to $1,450 through employer and employee contributions, and that
Todnem’s deductible was only $150. The district court noted that each plan’s affordability
would depend on the child’s health needs each year. For instance, the district court
determined that if the child’s medical expenses are high in a given year, the out-of-pocket
expenses under Hansen’s policy would be approximately $50 more per month than under
13
Todnem’s plan. The district court therefore concluded that Todnem’s plan was more
appropriate and directed Hansen to pay $83 per month in medical support.
Hansen argues that the district court erred in concluding that Todnem’s plan was
less expensive, and thus more appropriate, because the district court found that Hansen’s
dependent health insurance costs per month were less than Todnem’s. He contends that
the district court’s consideration of deductibles and co-pays for future medical expenses is
speculative and cannot be considered part of health care coverage as it is defined in the
statute.
The definition of health care coverage in the statute does not explicitly limit medical
support costs to monthly premiums. See id., subd. 1(a) (2016) (“‘Health care coverage’
means medical, dental, or other health care benefits that are provided by one or more health
plans.”). The statute provides that a health plan’s affordability depends on whether its costs
are reasonable. Id., subd. 3(4) (“Dependent health care coverage is affordable it if is
reasonable in cost.”). The district court found that though the child does not have any
chronic medical conditions, the child’s health care needs are not limited to preventive care.5
While the district court decided that both parents had comparable health care coverage, it
determined that Todnem’s policy, which had slightly higher premiums, was more
reasonable in cost because it had a much lower deductible.
5
The district court considered Todnem’s submissions regarding the child’s recent medical
expenses and found that during a recent five-month period, health care providers had billed
the parents for $1,118 in medical expenses.
14
Because it is a proper exercise of the district court’s discretion to consider
premiums, deductibles, and copayments in determining the affordability of a health care
policy under section 518A.41, subdivision 3(4), we conclude that the district court did not
abuse its discretion in determining that Todnem had the more affordable, and thus more
appropriate, health care policy.
IV.
Hansen argues that the district court exceeded its authority in deciding not to provide
him, as the higher income earner and a parent with equal custody and parenting time, with
the federal tax dependency exemption. For the reasons explained below, we disagree.
A. Federal Statutory Requirements for Head of Household Status and the
Federal Dependency Exemption
An individual who qualifies as a head of a household is entitled to a special tax rate
under the Internal Revenue Code (the code). 26 U.S.C. § 1(b) (2012). The code also
permits a taxpayer to claim an exemption for each of his or her dependents. 26 U.S.C.
§ 151 (2012). In addition to other criteria that are not relevant here, in order to claim the
head of household status and the dependency exemption, the taxpayer must maintain a
household that is a qualifying child’s principal place of abode for more than one-half of
the taxable year. See 26 U.S.C. §§ 2(b)(1) (2012), 151(a)–(c).
Federal law presumes that when parents are divorced or separated, the parent who
has primary physical custody of a child is entitled to claim that child as his or her
dependent. But, in a situation in which two or more taxpayers may claim the same
qualifying child as a dependent, the code provides a tie-breaker rule. Under 26 U.S.C.
15
§ 152(c)(4)(B) (2012), if the parents claiming a qualifying child do not file a joint tax
return, the child is treated as the qualifying child of “(i) the parent with whom the child
resided for the longest period of time during the taxable year, or (ii) if the child resides
with both parents for the same amount of time during such taxable year, the parent with
the highest adjusted gross income.”
B. The District Court’s Application of the Order and Waiver Process
In this case, the district court did not apply the tie-breaker rule and instead chose to
use an order and waiver process, pursuant to 26 U.S.C. § 152(e) (2012), to allocate the
dependency exemption to the parent who was not able to claim head of household status.
The code provides that the custodial parent is entitled to the dependency exemption unless
the custodial parent signs a written declaration waiving the right to claim the child for the
taxable year and the noncustodial parent attaches a copy of that waiver to his or her tax
return. Id. (e)(2). A “custodial parent,” for purposes of the code, is the parent who has
custody of the child for a greater portion of the calendar year. Id. (e)(4)(A). Consistent
with the code, Minn. Stat. § 518A.38, subd. 7(a) (2016), provides:
The court may allocate income tax dependency exemptions for
a child and require a party who has the child in the party’s
physical custody for more than one-half of the calendar year to
provide a properly executed declaration that releases the
party’s claim to the child as a dependent under section 152(e)
of the Internal Revenue Code of 1986, as amended, to the other
parent.
Here, the district court correctly concluded that equal parenting time between
parents does not necessarily equate to both parents actually having the child in their care
for the same number of nights during a taxable year. The district court also determined
16
that the dependency exemption may be allocated between the parents without consideration
of the number of nights the child spent with each parent during the year or which parent
had the higher adjusted gross income. But due to reasonably expected yet unknown
variations in actual parenting time, the district court determined that it could not reasonably
predict which parent would qualify as the parent who could claim the other child-related
tax benefits, including head of household status. The district court then explained that its
allocation of the dependency exemption to the parent unable to claim head of household
status provided an option in which each parent could receive some tax benefit every year
while recognizing the difficulty in accurately ascertaining in advance which parent would
be able to claim head of household in future tax years.
The district court also evaluated the potential tax benefits of the child to each parent.
The district court found that if Hansen claimed head of household status, he would receive
a tax benefit of $1,468. If Todnem claimed head of household status, she would receive a
benefit of $245. The district court also found that the dependency exemption’s tax benefit
to Hansen and Todnem would be $1,777 and $1,335, respectively. The district court
therefore concluded that its allocation of the dependency exemption to the parent who
could not claim head of household status would lead to an equitable result because it would
“ensure that each parent receives some of the tax benefits each year.”
C. Preemption
Hansen contends that federal law preempts a state district court’s authority to
allocate the dependency exemption on the basis of which parent claims head of household
17
status.6 He asserts that the code requires a state district court to allow, in a joint physical
custody situation where the child resides with both parents the same amount of time during
the year, the parent who has the higher gross income to claim the dependency exemption.
See 26 U.S.C. § 152(c)(4)(B). Therefore, Hansen claims that the district court was not
authorized to allocate the exemption under the order and waiver process.
Citing this court’s decision in Gerardy v. Gerardy, Hansen contends that because
the district court could not determine which parent was the custodial parent for tax
purposes, section 152(e) does not apply and the district court therefore had no basis for
requiring either party to execute the waiver.7 See 406 N.W.2d 10, 14 (Minn. App. 1987)
(holding that district court ignored express language of federal tax code when it awarded
exemption to noncustodial parent, although no exception to general rule applied).
Minnesota courts have clearly established that the district court has authority to award the
dependency exemption to a noncustodial parent and to require a custodial parent to waive
the exemption. Fudenberg v. Molstad, 390 N.W.2d 19, 21 (Minn. App. 1986). Though
the district court did not explicitly identify whether Hansen or Todnem is the custodial
6
His argument relies significantly on Reichert v. Hornbeck, a case from the Maryland
Court of Special Appeals. See 63 A.3d 76, 114–15 (Md. Ct. Spec. App. 2013). However,
Reichert is not binding on this court and is factually and legally distinguishable from this
case.
7
He also argues that the definition of “custodial parent” is distinct from the definition of
“head of household.” Though it is true that in order to claim head of household status, the
parent must not be married or a surviving spouse, the essential requirement that the district
court considered –– whether the child lives in one parent’s principal place of abode for
more nights in the taxable year than the other parent’s –– is not inconsistent with qualifying
as the custodial parent and the head of the household. See 26 U.S.C. §§ 2(b) (2012),
152(e)(4).
18
parent, it directed the parents to determine, at the end of each calendar year, who had the
child in their custody for more than one-half of the calendar year. Based on that
determination, the parents would then be able to designate the head of household and
whichever parent receives this designation would be required to execute a waiver for the
dependency exemption to the other parent. Contrary to Hansen’s arguments, this process
of designating the “head of household” based upon a determination of which parent had
the child in his or her care for more than one-half of the calendar year does not violate
either 26 U.S.C. § 152(e) or Minn. Stat. § 518A.38, subd. 7(a).
Under the implied conflict preemption doctrine, federal law preempts a state law if
“it is impossible for a private party to comply with both the state and federal requirements”
or if “the state law stands as an obstacle to the accomplishment and execution of the
purpose and objective of Congress.” Gretsch v. Vantium Capital, Inc., 846 N.W.2d 424,
433 (Minn. 2014). The district court’s order in this case does not violate either test.
First, 26 U.S.C. § 152(e)(2) permits allocation of the dependency exemption to a
noncustodial parent through order and waiver. Fudenberg, 390 N.W.2d at 21. By
allocating the exemption to the parent who cannot claim head of household status, the
district court is allocating the exemption, through order and waiver, to the parent whose
household is the child’s principal place of abode for less than one-half of the taxable year.
In doing so, the district court’s order does not conflict with the requirements of section
152(e). See 26 U.S.C. § 152(e)(1)–(2).
Second, the legislative aim of 26 U.S.C. § 152(e), as it was amended in 1986, was
to alleviate the administrative burden on the Internal Revenue Service (IRS) by reducing
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its involvement in dependency disputes between parents. Fudenberg, 390 N.W.2d at 21.
The district court’s allocation of the dependency exemption does not interfere with
Congressional intent because it has no financial or administrative impact on the IRS. For
these reasons, we conclude that the district court’s allocation of the dependency tax
exemption was not preempted by federal law and did not violate Minn. Stat. § 518A.38,
subd. 7(a).
“The allocation of the federal-tax exemptions is within the [district] court’s
discretion.” Ludwigson v. Ludwigson, 642 N.W.2d 441, 449 (Minn. App. 2002). And,
Minnesota courts permit deviating from the presumption that the exemption must be
claimed by the custodial parent, if transferring the exemption to the noncustodial parent is
in the child’s best interests. See Rogers v. Rogers, 622 N.W.2d 813, 823 (Minn. 2001)
(“The code does not preclude state district courts from allocating tax dependency
exemptions to a noncustodial parent incident to the determination of child support and
physical custody.”); see also Crosby v. Crosby, 587 N.W.2d 292, 294, 296–98 (Minn. App.
1998) (awarding dependency exemption to father despite fact that mother was designated
as primary physical custodian, physical care was equally divided between parents, and
mother had substantial financial resources), review denied (Minn. Feb. 18, 1999).
Also, Hansen’s proposal would not be in the child’s best interests because it would
incentivize the parents to keep the child in their care for more nights than the other in order
to avoid the tie-breaker rule of section 152(c)(4)(B). Upon reviewing the district court’s
factual findings, particularly the comparison of the parents’ resources and income available
to support the child, it is clear that the district court’s decision resolved these tax issues in
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light of what would be in the child’s best interests, namely ensuring adequate financial
support and alleviating conflict between the parents.
D. Consideration of the Statutory Factors in Allocating the Dependency
Exemption
Hansen also asserts that the district court failed to make adequate findings regarding
allocation of the dependency exemption. Hansen cites to four statutory factors that the
district court is required to consider: (1) the financial resources of each party; (2) a parent’s
ability to provide for a child if not awarded the exemption; (3) whether one party or both
parties would receive a tax benefit from the exemption; and (4) the impact of the exemption
“on either party’s ability to claim a premium tax credit or a premium subsidy.” See Minn.
Stat. § 518A.38, subd. 7(b)(1)–(4) (2016). If the parties contest the allocation, as is the
case here, the district court must make findings to support its allocation decision. See id.,
subd. 7(f) (2016).
Here, the district court properly evaluated the factors by considering the relative
resources of the parties and the potential benefits that will result from the exemption. See
Crosby, 587 N.W.2d at 298 (noting that parties’ relative resources justified allocation of
dependency exemption). The district court addressed the parties’ incomes, finding that
Hansen has approximately twice as much income as Todnem to support the child. The
district court also highlighted that because Todnem has limited resources, an award to
Hansen of all the child-related tax benefits would negatively impact her ability to provide
for the child’s needs. And in the chart and accompanying exhibits incorporated into its
order, the district court identified the approximate value of the dependency exemption to
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each parent. The district court also evaluated how allocation of the exemption to each party
would impact other tax benefits. For example, the district court recognized that its
allocation of the dependency exemption would leave both parents unable to claim the child
tax credit. Based on the district court’s consideration of the relevant statutory factors and
the adequate findings in its order for allocation, we conclude that the district court did not
abuse its discretion in allocating the dependency exemption to the parent who is not able
to claim head of household status for any given taxable year.
DECISION
In its computation of basic child support, the district court correctly interpreted
Minn. Stat. § 518A.35, subd. 1(e), in capping the combined basic child support obligation
but not the parents’ combined PICS. The district court made sufficient findings regarding
the best interests factors and did not abuse its discretion in denying Hansen’s request to
provide in-home, before and after school child care. Because it is appropriate for the
district court to take into account deductibles and co-payments, along with the monthly
premiums, when considering a policy’s affordability, the district court also did not abuse
its discretion in finding Todnem’s health care policy to be more affordable than Hansen’s
policy. And, because the district court’s order did not conflict with federal law, the district
court did not abuse its discretion in allocating the dependency exemption to the parent who
could not claim head of household status.
Affirmed.
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