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Child Support and the Right to Claim Children on Federal Tax Returns

Judge Lawrence Jones of the Ocean County Superior Court has just released a decision entitled Zeitlin v. Zeitlin which addresses child support and the right to claim children on federal tax returns in the event of child support arrearages in New Jersey.

It is common for parents to share or alternate the right to claim children on their federal tax returns as part of the divorce process. The right to claim a child is significant as it can create a tax benefit worth several thousands of dollars.

Pursuant to the Internal Revenue Code, it is presumed that the primary parent claims any child or children. However, in the New Jersey Appellate Division decision Gwodz v. Gwodz 234 N.J. Super, 56, the New Jersey Appellate Division recognized the authority of the Court to equitably determine the right to claim children. Since that time, it has been common practice for each parent to claim a single child on alternating years or if there are two children, for each parent to assert a single dependency exemption.

There have been no significant reported decisions since Gwodz addressing the right to claim children in the event of child support arrearages. The Zeitlin decision, authored by Judge Jones appears to be one of the very first cases addressing the right to claim a child in the event of child support arrearages.

Relying on Tax Court authority, Judge Jones ruled that implicit in the right to claim a child was a covenant of fair dealing which suggests the absence of arrears as a precondition to claiming a child as a dependent for federal tax purposes. This opinion will likely be recognized by most courts throughout New Jersey as persuasive authority.

All NJ family law litigants should now be on notice that the right to claim children on Federal Tax Returns will now be contingent upon the absence of child support arrearages at the conclusion of the calendar year. This decision appears to make a great deal of common sense. If the obligor parent is hundreds or thousands of dollars behind in support, he or she should not be allowed to claim a child and receive a substantial federal income tax benefit. If there are significant arrearages it follows that the custodial parent is carrying the entire load and paying all of the expenses for the child or the children.

To be smart, obligors should make sure that there are no arrearages at the end of the calendar year if they intend to claim a child on their federal tax return. Conversely, the recipient of child support should decline to execute Form 8332 which releases the custodial parents' entitlement to claim a child in the event there are significant child support arrearages. 

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