Child Support Tax Implications in New Jersey
Everybody must pay taxes, and it may be unclear how child support payment or shared custody could affect tax payments. The first thing to know is that there is no direct impact on taxes for making or receiving child support payments. However, income as designated on tax forms could affect the length of child support obligations and how much they will be. To learn more about child support tax implications in New Jersey, you may wish to get in touch with a dedicated child support attorney.
How Taxes Determine Child Support Payment
So first of all, the child support guideline is taken into account the gross taxable income and tax affected within the guidelines. As long as a person’s income is $187,200.00 or less per annum, their child support payments will be determined according to the state guidelines. Their income will be determined based off of their tax filings with the IRS.
Is Child Support Deductible in New Jersey?
In New Jersey, child support is not deductible, but parents may take turn claiming the child(ren) as dependents for the tax benefits. This means that parents who share custody could both get the tax benefits of claiming a dependent. While making or receiving child support payments cannot be deducted from taxes, there are still tax implications of having a custody arrangement in New Jersey. Speaking with a local lawyer could be key to understanding how taxes and support payments affect each other.
Claiming a Payment as Child Support
If a payment is being made in accordance with a court order to pay for a child’s necessities. Child support does not count as income when it is received, and therefore does not impact taxes in that sense. There is also a concern about who claims the child care credit on their tax forms. To ensure that everything is legally compliant and that all possible deductions are made, parents should speak to an attorney and a professional accountant about their situation.
Things to Remember About Child Support and Taxes
It is essential for parents to understand that if they do not pay their child support, then the state may garnish any tax refunds that they received. If a person is in arrears, they will not even receive their tax return and those funds will be immediately docked by the government to meet the past payments. It is essential that a person works with an attorney and an accountant all along to ensure that support payments are made and that there will be no need for wage or tax refund garnishment.
Learn About the Tax Implications of Child Support Payments Today
An attorney could help you understand what the child support tax implications in New Jersey are and how they might affect you. If you and your child’s parent are filing taxes separately, one of you may be able to claim the child as a dependent, potentially saving money. However, it is important to remember that child support is not taxable whether it is being paid or received. To learn more about tax responsibilities while raising your child, get in touch with an accountant and a dedicated child support lawyer. Call right away to get started.