green bg
parents child in middle

Is Child Support Considered Taxable Income in NJ?

Divorce is never easy, and unfortunately, children are often significantly affected by it, both emotionally and economically. As such, the court typically requires the non-custodial parent to pay child support to mitigate the financial toll a divorce can have on a child and the custodial parent. When parents split, they are still responsible for financially supporting their children. However, child support can dramatically impact your finances. Regardless of whether you pay or receive child support, it’s crucial to understand the tax implications of child support in New Jersey. Please continue reading to learn whether child support is considered taxable income and why connecting with an experienced Ocean County Child Support Attorney is in your best interest. 

Are Child Support Payments Taxable?

Child support payments serve as a vital component of providing financial stability and ensuring the well-being of children of separated or divorced parents. If you are receiving child support payments for your children, these funds are not considered taxable income. As a custodial parent, you do not have to report child support payments when reporting your federal income tax return. This is because the Internal Revenue Service (IRS) acknowledges that child support payments are for the benefit of the child. Therefore, these funds must remain untaxed to provide critical assistance for a child’s upbringing.

Are These Funds Tax-Deductible?

Similarly, if you are a non-custodial parent, child support payments do not qualify as tax-deductible. When taxpayers claim deductions, specific expenses are subtracted from their taxable income, reducing their overall tax liability. Unfortunately, you cannot claim these payments as a deduction on your tax return. Child support funds don’t fall within the category of tax-deductible expenses because they are utilized exclusively for the financial well-being of a child. They are not subject to tax implications to ensure a child’s needs are adequately met.

Which Parent Can Claim the Child as a Dependent?

Another question that often arises considering the taxation of child support payments in New Jersey is which parent can claim their child as a dependent. Generally, the IRS allows the custodial parent to claim the child as a dependent for tax purposes. It’s important to understand that claiming a child as a dependent can reduce your taxable income. However, in joint or shared physical custody cases, the IRS will generally give status to the parent with the higher adjusted gross income.

If you are facing issues about child support in New Jersey, please don’t hesitate to contact the Law Office of Sarina Gianna, LLC, for quality legal support. Our skilled Ocean County child support attorneys are prepared to fight for the support you, your child, and your family deserve.