For many, child custody and support is the most contentious matter during their divorce. Both parents likely want to spend as much time as possible with their child, which can often lead to a bitter court battle. Once child custody is determined, the courts may require the other parent to pay child support. If this reflects your circumstances, understanding the potential tax implications of this is critical. Keep reading to learn more about these matters and why it’s critical to connect with a Somerset County child support attorney who can help with any issues you may face.
How Is Child Support Determined?
New Jersey does not have a set formula for determining how much child support a non-custodial parent will pay to the other, as there are many factors that can influence this decision. Though the courts will generally follow the guidelines for this matter, which includes adding up both parent’s income and dividing it according to their annual earnings, other factors will change these matters.
These factors include, but are not limited to the following:
- Each parents income
- The custody arrangement
- Employment history
- The needs of the child
Though you may find that there are many calculators online that can estimate how much you would pay or receive based on your circumstances, there is no guarantee these are up to date. As such, you should consult an experienced attorney who can help you determine the nature of these payments.
Will This Have Any Tax Implications?
It’s important to understand that child support cannot be reported on your taxes. As such, if you are the paying parent, you will not be able to report this on your taxes to receive a deduction, and the recipient parent would not report it as income. This is to help ensure all funds go to the child.
One common question that parents have regarding these matters is who gets to claim the child as dependants on their taxes. Generally, the Internal Revenue Service (IRS) gives the custodial parent preference in these matters. It is not uncommon, however, for parents to work out a deal. For example, if they share two children, both parents may claim one child annually. In other cases, they may agree to alternate years, allowing both parents the ability to claim the child as a dependant.
You should also note that if you are late on payments, any owed funds, referred to as arrears, can be taken from your tax return and given to the recipient’s spouse.
As you can see, there are many considerations you should make when going through a divorce. At the Siragusa Law Firm, we understand how important these matters can be. Connect with us today to learn how we can assist you through these complex matters.
