New Jersey Tax Questions FAQs

If I file a joint tax return with my spouse and we owe money to IRS, who is responsible?
IRS will collect the tax liability from either one or your, or both, depending on who it can collect if from more easily.

What if my property settlement agreement assigns total liability for the federal tax to my spouse?
IRS is not bound by that agreement. If IRS compels you to make payment, usually by withholding your income tax refund, you must then seek reimbursement from your spouse in family court, usually through a post judgment motion to enforce your rights under the agreement.

Can my spouse force me to join in and sign a joint return if I want to file separately?
No. You are free to file separately if you wish. Be aware that if filing separately costs your spouse a lot of money and you get a large refund, your spouse may in a pending divorce action ask the family court to order you to reimburse part of his or her increased tax unless there is a good reason you didn't file jointly. This relief may be granted depending on the circumstances.

What is a good reason?
You should not sign a return you know or have reason to believe is fraudulent because it understates income, overstates expenses or omits information requested by IRS. You may also wish to avoid a joint filing if your spouse's refund will be retained due to back taxes owed individually or past due child support.

Who gets the dependency exemption for the children?
If you file jointly, you both share them on one return.

If you file separately and there is a written agreement as to who gets the exemptions, follow the written agreement.

If you file separately and there is no custody order or agreement, then the person who has physical custody of the child for the greater portion of the year is entitled to declare the exemption. (Reg Section 1.152-4(b))

If you file separately and there is a custody order, then the custodial or residential parent declares the exemption in the absence of a written agreement dictating otherwise.

We have an agreement that the noncustodial spouse is to declare the exemptions for our children. How do we do this?
This requires the custodial spouse to sign IRS form 8332 confirming the dependency exemption is to be declared by the noncustodial parent. A copy of this form is located in the documents section and is also available from IRS. The noncustodial parent attaches a copy of completed form 8332 to the tax return each year the dependency exemption is declared by that parent.

What happens if we both declare the dependency exemption for the same child on two different returns?
IRS will probably match up the returns on its computer flagging program and request further information from each of you to substantiate your claim to the dependency exemption. This may result in a partial or full audit of both returns. IRS may simply deny the exemption to both parents or it may determine which parent is permitted to declare the exemption and deny the exemption to the other. The other parent may have penalties and interest to pay on the tax due for that year.

We were divorced on December 30th. Can we file a joint return because we were married most of the year?
No. If you are not married on December 31st, you cannot file jointly with your ex-spouse for that calendar year. If you know filing jointly will save you money ask you attorneys to have your divorce hearing rescheduled after the end of the year.

So, if I am divorced on December 31, I can file as a single person for that year?
Yes, even though you were only single one day of that year.

Do I have to report child support and pay tax on it?
No. Child support is not taxable income to the person who receives it. It is not deductible to the person who pays it.

I paid for my child's unreimbursed medical and dental expenses. Can I deduct those whether I have the right to claim that child's dependency exemption?
Yes, if your total medical expenses exceed the statutory 7.5% per cent of your adjusted gross income. You can deduct these expenses for a non-custodial child or custodial child, whether you are entitled to declare the dependency exemption for that child or not. Remember, you can only deduct the portion of these expenses that health or accident insurance did not reimburse. Code Section 213(d)(5)

Is the same true for child care credit? Can I deduct it even if I'm not the custodial parent?
Only the custodial parent is entitled to claim the child and dependent care credit, even if the custodial parent is not entitled to claim a dependency exemption for the child , provided the reason the custodial parent is not entitled to claim the dependency exemption is that parent's waiver of the exemption for declaration by the other parent. IRS regulations do not accomodate shared or split custody arrangements and permit only the primary custodial parent to claim the child care credit. (Code Section 21)

Additional information is also available from IRS. You may call 1-800-829-4477 for Tele-Tax Topics, enabling you to listen to up to three topics each time you call. Relevant topic numbers are:

203 Failure to pay child support 353 Filing status 354 Dependents 406 Alimony received 452 Alimony paid 602 Child and dependent care credit

IRS also maintains a fax back service enabling you to receive printed material on the above topics and copies of IRS forms including Form 8332 (fax order no. 13910). Call 703-487-4160 from your telephone connected to a fax machine and follow the instructions. The material will be faxed to your machine.

If you have specific questions about any of the above, you should consult a qualified tax professional. The foregoing is a simplified explanation of a complex code and does not cover all circumstances you may encounter. Code and Regulation references have been listed for the convenience of those professionals who may not be familiar with these provisions to aid you in discussion with your advisors.