taxes

Be a Vault! Protect Confidential Information In Family Law Cases

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Protecting your confidential information should always be a primary concern in life, but especially so in divorce and family law cases. When you are engaged in a pending divorce or paternity pre- or post-judgment case, you will likely be called upon to provide what will seem like an endless list of financial documents. You will need to provide your attorney, opposing party, opposing attorney and the court with wage stubs, tax returns, bank statements, credit card statements, retirement and investment statements, social security reports, and many, many other documents. You may even need to provide medical records and other personal information. Who would want these documents circulating without protection? The answer is: no one!

Wisconsin Statutes require that certain documents which confidential information must be redacted before filing with the court. This means that identifiable information such as social security numbers, account numbers, etc. must be removed before a document can be filed with the court. If you are going to file such a document with this information, you need to ensure that you, your attorney, and the opposing attorney removes this information before filing or penalties can result.

Not only do you have a duty to protect your own confidential information, but you also have to be careful to protect the other party’s confidential information. In a recent Wisconsin Court of Appeals decision, Heidi Black v. Jeffrey Allen Kelly and MidWest Mgmt., Inc., No. 2021AP1239 (Wis. Ct. App. Sept.1, 2022), the court was called upon to decide a unique situation in which protected financial information was inadvertently made public through an opposing party’s employer’s computer system.

In Black v. Kelly and MidWest Mgmt., Inc., Heidi Black’s Financial Disclosure Statement from her divorce case was made available online through her former spouse’s employer’s computer server. Black’s friend discovered that her Financial Disclosure Statement was available online to the public after completing an internet search of Black’s name. Black sued her former spouse, Jeffrey Allen Kelley, and his employer, Mid-West Management, Inc., for making public her Financial Disclosure Statement from her divorce action.

The court in Black v. Kelly and MidWest Mgmt., Inc. found in Kelley’s and Mid-West Management, Inc.’s favor and dismissed Black’s civil case for damages only because there was no evidence that Black’s Financial Disclosure Statement was viewed by anyone besides Black’s friend, Kelley, and Mid-West Management, Inc. when removing the document from public access. Wisconsin law requires a finding of “publicity” of the protected information which is “the matter is made public by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge” in order to award damages. See Black v. Kelly and MidWest Mgmt., Inc. Publicity was not proven in this case. The court distinguished “publicity” from “publication” which includes an element “in connection with liability for defamation” when evaluating if damages should be awarded. See Black v. Kelly and MidWest Mgmt., Inc. The Defendants-Respondents in this case hired experts to show that Black’s Financial Disclosure Statement was viewed by limited persons and was not made public communication.

The importance of Black v. Kelly and MidWest Mgmt., Inc. suggests that there could, however, be a civil tort basis should a party’s financial, confidential and/or protected information be made public communication. The Black case and the applicable case law does not require a finding of malice or intention in making the information public in order for damages to be awarded it only needs to be proven that the information was made a communication to the public at large.

What does that mean for you? The answer is clear, you need to be a vault! Protect your soon-to-be ex’s information the same way that you protect your own: with the tightest security and highest level of protection.

If you have questions about a family law action and how to best protect yourself, please contact Nelson, Krueger & Millenbach, LLC at (414) 258-1644 to schedule a free initial consultation to discuss your case.

The Effect of the 2021 Child Tax Credit and Advance Child Tax Credit Payments and Filing Your 2021 Taxes

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Many parents have legal agreements, such as a Marital Settlement Agreement or Paternity Court Orders, which state that they alternate who claims their child or children’s tax credits each year. What might have made things confusing over the last year is the Economic Impact Payments and the Recovery Rebate Credit for 2021. The IRS determined who received the 2021 advance child tax credit payments based on the information provided by taxpayer’s 2020 tax returns, or their 2019 tax return if the IRS had not processed or received the 2020 return. This may have created confusion if parties alternate claiming their children’s tax credits every other year.

The third Economic Impact Payment was, in fact, an advance payment of the 2021 recovery rebate credit. In some situations, though, an eligible parent may not have received this payment for a qualifying dependent child that the parent is legally entitled to claim on their 2021 tax return. The IRS has offered guidance that confirms that the parent can claim the 2021 recovery rebate credit, regardless of any Economic Impact Payment that the other parent received.

 If a parent received the Economic Impact Payment for a dependent child that they are not legally entitled to claim on their 2021 tax return, they may not be required to pay it back. The IRS has issued information to serve as a guideline for whether the parent who received payments, but was not entitled to claim the dependent child in their 2021 tax return, is entitled to repayment protection. A parent whose 2021 tax return shows a modified adjusted gross income of a maximum of: $60,000 if he/she is married and filing a joint return; $50,000 if filing as head of household; and $40,000 as a single filer or married and filing a separate tax return, will qualify for repayment protection.

However, the payment protection amount will decrease based upon how much more the parent’s modified adjusted gross income is than the thresholds for the total repayment protection. (Outlined in the paragraph, above.) The repayment protection will be completely phased out when that parent’s adjusted gross income on his/her 2021 tax return is: $120,000 or more if married and filing a joint return; $100,000 if filing as head of household; or $80,000 as a single filer or are married and filing a separate return. The IRS expects that most parents who need to repay will do so from their 2021 income tax refund.

Finally, a parent who was eligible to receive advance payments for their child or children, but did not receive these payments, can claim the full amount of the child tax credit for their children that they may legally claim. It does not matter if the other parent received advance child tax credit payments.

The IRS has answered many common questions about the 2021 Child Tax Credit and Advance Child Tax Credit Payments on its website. It may also be helpful to utilize the services of a qualified tax preparer to file your taxes this year, given the rules involving the Advance Child Tax Credit Payments. If you have questions, or concerns, regarding how this may affect your family regarding a divorce, or existing orders regarding child support and other financial issues involving your children, please call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.