Nothing can complicate taxes like divorce. Between child support and alimony (spousal support) orders, you can expect your post-divorce taxes to be complex. To help you navigate your tax filing, here is what you should know about how your support orders can affect your taxes this year.
Child support is relatively unaffected by taxes, in most cases. The parent receiving the support does not have to report child support as income. Similarly, the paying parent cannot deduct child support payments. Your taxes can affect your child support order, however, so consider speaking with an attorney if there has been a change in your financial circumstances.
If you have unpaid child support, the non-custodial parent’s tax refund may offset the arrearage (past-due support). If certain requirements are met, the non-custodial parent’s state or federal tax refund can be seized to go toward arrearage.
Understanding alimony’s effect on taxes is less straightforward. Currently, paying spouses are able to deduct alimony payments from their income taxes. Receiving spouses have to claim the alimony payments as taxable income. So, keep these guidelines in mind when filing for 2017.
Starting January 1, 2019, New Jersey alimony guidelines will change. In divorces finalized in 2019 and beyond, the paying spouse will no longer be permitted to deduct alimony payments. This means they will pay taxes on that amount. Because this will lower their available income, the spouse receiving the alimony may receive a smaller payment. Furthermore, the recipient spouse does not have to claim alimony as taxable income. The tax burden shifts from the recipient spouse to the paying spouse.
Starting in 2019, divorcing couples will have to work strategically with their respective attorneys to reach an agreement that benefits both spouses and minimizes the effect of the new law.
Do you need help with child support and alimony? If so, Williams Law Group, LLC can help. Our skilled attorneys can advise you of your rights and help you protect them. Located in Short Hills, New Jersey, Williams Law Group, LLC provides compassionate and dedicated legal services to Union, Bergen, Essex, Hudson, Morris, Monmouth, and Middlesex counties, and the surrounding areas. Our knowledgeable attorneys handle divorce and family law, child custody, and child abuse/neglect cases. Call our office at (908) 810-1083, email us at firstname.lastname@example.org, or contact us through our confidential online form to schedule a consultation and ultimately get you connected with an experienced New Jersey divorce and child custody attorney.