What Are the Tax Implications of Child Support in New Jersey?

Going through a divorce is a complex emotional matter for all those involved. Parents may do everything possible to spend more time with their children, and children may not fully understand what’s happening. However, to ease the transition from a two-parent to a one-parent household, the court orders child support payments from one spouse to another. One of the most common questions regarding this matter New Jersey child support attorneys are asked is whether or not there are tax implications for paying child support. Understanding what you can expect is critical if you are going through a divorce and have minor children to consider. This blog explores what you should know.

How Are Child Support Payments Determined in New Jersey?

In New Jersey, the courts take child support matters very seriously. This is because the goal of the court is to ultimately provide the best possible life for the child and cause minimal disruption. As such, they will consider several factors when issuing a decision on child support. These factors include, but are not limited to:

• The custody arrangement
• The standard of living the child is accustomed to
• The income of each parent
• The earning capacity of each parent
• How many children are involved
• The needs of the child
• How old the child is
• The tax implications of support for each parent
• Extracurriculars for the child

Are There Any Tax Implications for Child Support?

It’s important to understand that child support in New Jersey is not taxable. As such, the recipient parent does not need to report this as income on their taxes and the paying parent does not need to report this as a deduction. This is to help ensure the funds go to the child as intended.

Another important tax consideration you’ll make is who can claim the child as a dependant on their taxes. Generally, the IRS grants the custodial parent this right. However, if parents have equal custody, whichever parent has more overnights will be deemed the custodial parent for these matters and granted the ability to claim the child.

In some instances, you and your ex may work out an agreement regarding who can claim the child. For example, you may alternate claiming the dependant annually, or if you have an even number of children together, you can each claim half. If you decide to alternate, you’ll need to file Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This allows you to relinquish your right to claim the child, granting the other parent permission to do so.

As you can see, there are many considerations that must be made when determining child support payments, which is why working with an experienced attorney for these matters is critical. If you’re going through a divorce and need assistance with child support matters, the team at Haber Silver Russoniello & Dunn can help. Connect with our team today to learn how we can fight for you ad your children during these complex matters.