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The federal tax implications of child support

A New Jersey parent who receives child support is not required to count it as taxable income, and the parent who makes a child support payment is not allowed to deduct it for tax purposes. In 2013, Americans owed $32.9 billion in child support while $22.5 billion was actually collected according to the U.S Census Bureau.

Who gets to claim a child as a dependent depends on a variety of factors. Generally, the custodial parent claims the child regardless of how much support he or she actually provides. However, the non-custodial parent may be allowed to claim a child as a dependent if there is a written agreement with the other parent. Furthermore, the non-custodial parent must fill out and attach the applicable form to his or her tax return.

To avoid a potentially complicated tax situation, many divorced couples negotiate who gets to claim the deduction in a given year during divorce settlement talks. It is important to note that the IRS does not allow parents to split the deduction even if parents share custody. Parents may agree to claim the deduction in alternating years or come to a similar arrangement. As this may impact a parent's budget, it is generally a good idea to decide this matter well before tax time if possible.

An attorney may assist parents in either collecting child support or getting an order from a judge. Legal counsel may be helpful for those seeking to terminate or modify an existing order. Orders may be modified if a parent sees a change in income or terminated when a child turns 18. A parent must comply with an existing order until it is modified or terminated even if circumstances make it difficult to do so.

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