Tax time can be one of the most stressful periods of the year because of all the confusion surrounding deductions and what counts as taxable income. For example, can you write off child support? Many New Jersey residents paying child support question whether child support can be written off when tax time rolls around.
Understanding how child support payments affect your taxable income is essential so you don’t run afoul of the Internal Revenue Service. Miscalculating your taxes can lead to significant consequences in fees and penalties.
New Jersey Child Support System
Child support is monetary payments made to a custodial spouse to support the upbringing of children when the parents are no longer married or together. It is a system that is in place to give children the reasonably same quality of life that they enjoyed before their parents’ separation.
New Jersey uses Child Support Guidelines to help the court calculate the appropriate amount of child support due to the custodial parent. The courts recognize that there is no absolute cost of raising a child. Child support calculations are based on the family’s standard of living, parents’ income, marginal cost estimations, tax filings, and the number of children in the family to establish child support payments.
Tax Implications of Freehold, New Jersey Child Support
In New Jersey, child support is not tax deductible. If you pay child support to the other parent, the state does not allow you to deduct these payments from your taxable income. Therefore, you do not report these payments on the NJ-1040 form when filing your state taxes.
Instead, some parents take turns claiming their children as dependents to receive tax benefits. Parents with joint custody can alternate the years, claiming the children as dependents so that each parent can receive a deduction on their taxes. To make this arrangement work, parents must have relatively equal custody time with the children and maintain excellent communication. When parents fail to work together or make mistakes on their tax forms, there can be repercussions that make tax time a headache.
The IRS stipulates that only one parent can claim a child as a dependent on their taxes. When divorced parents both claim children as dependent on their taxes, it can trigger an IRS audit, and the agency must investigate which parent’s claim takes priority.
There are additional tax implications to consider as well. If an individual is behind on child support payments, the state can garnish any tax refunds that a person may receive after filing their tax return. When an individual is in arrears, the government immediately docks tax refund money to meet past-due payment obligations.
Can An Attorney Help You Understand New Jersey Child Support and Tax Implications?
Tax time can be incredibly stressful as it is; when you factor in child support and claim children as dependents, filing your state and federal taxes can become overwhelming. It is vital that parents understand how child support payments and tax law work before filing with the IRS. While child support is not tax-deductible, there are still tax benefits you can reap when claiming a child as a dependent. However, claiming a child as a dependent without meeting IRS guidelines or speaking to the other parent can land you in hot water with the IRS.
An experienced New Jersey child custody attorney can help you manage your child custody case and work toward giving your family the best outcome possible. Along the way, we can also help answer your tax questions and provide practical advice about what to expect about your tax responsibilities, how child support payments work, and what to do if you aren’t receiving the money you deserve.
A custody agreement is only part of the equation. You may need personalized legal advice and support as you face the challenges of the New Jersey legal and tax systems after a divorce or separation. A compassionate attorney can guide you through everything you need to know and didn’t even know you should ask.
Contact a Freehold Child Support Attorney Today
Everyone pays taxes. Get help understanding how child support payments may impact your tax burden by discussing your situation with a knowledgeable New Jersey child support attorney with The Law Office of Andrew A. Bestafka, Esq.. Our legal team works hard to ensure your child’s best interests and your financial stability remain top priorities.
Contact our Freehold office today at (732) 898-2378 to arrange a confidential consultation. Let’s work together to find legal solutions for your family’s unique needs.