Divorce is never easy and it is far more difficult and can be far more complex when there are children involved in New Jersey. One area that is affected as a result of the Tax Cuts and Jobs Act of 2017 is the ability to claim children as dependents on one’s tax returns. There are several items one should be aware of if considering a divorce.
The exemption for dependents was eliminated under the new law, but there are still benefits to be realized from claiming a child as a dependent. Principal among these are earned income credit and a child tax credit. Only one parent can claim an exemption, which can complicate the issue when parents share joint custody, as is now so often the case.
While only one parent can claim a child as a dependent, there are things that can be done to make the tax burden fairer for both parents. If there are multiple children, dependency can be shared between them with each parent claiming different children. An alternative method is to alternate years with one parent claiming a child or children one year and the other parent taking the tax benefit the following year.
Taxes can be complicated and can further complicate the goal of reaching a fair divorce settlement in New Jersey. A person in New Jersey who has children and is considering divorce may wish to consult with a family law attorney. The rules regarding shared custody can be complex and confusing and a knowledgeable attorney can help one to navigate the changes and arrive at a settlement that is in the best interests of the client.