NJSBA Family Law Section

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  • 1.  Federal tax exemption

    Posted 02-09-2016 11:25 AM

    Good morning,

    I was told by an adversary and a probation officer that a Judge is "prohibited" from entering an order that compels the custodial parent to share or alternate the tax exemption of a minor child (or children) even when the non-custodial parent pays more than 50% of the support of the child(or children). Is that true? That means that if the custodial parent does not amicably agree to share or alternate the exemption, nothing can be done. Really? Please let me know how you've handled this type of situation.

    Thank you.

    ------------------------------
    Durmeriss Cruver-Smith Esq.
    Brick NJ
    (732)920-5500
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  • 2.  RE: Federal tax exemption

    Posted 02-09-2016 11:39 AM

    No, they're 100% wrong.  https://scholar.google.com/scholar?hl=en&as_sdt=4,31&q=gwodz&scisbd=2

    "It is well settled that the Family Division has "the power to exercise authority to effectively allocate exemptions through use of its equitable power."     Gwodz v. Gwodz, 234 N.J. Super. 56, 62 (App. Div. 1989).


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    - Dave

    David Perry Davis, Esq.
    ----------------------------------------------------
       www.FamilyLawNJ.pro
    ----------------------------------------------------
    112 West Franklin Avenue
    Pennington, NJ 08534
    Voice: 609-737-2222
    Fax:    609-737-3222

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  • 3.  RE: Federal tax exemption

    Posted 02-09-2016 11:40 AM
    A Judge can order it (or the parties can consent to it) per NJ Law (such as Gwodz v. Gwodz, etc.).  However, Treasury Decision 9408 more or less states that the IRS is not going to interpret PSAs entered by State Courts and if the custodial parent claims the children as dependency exemptions on their Federal taxes, the IRS will allow it regardless of what the PSA states.  The noncustodial parent's remedy will be in NJ Superior Court for a credit or offset to make them whole (ex. if they lost $1,000 in a tax refund due to not being able to claim the child, they should receive the $1,000 from the custodial parent as a credit/payment).  

    Side note: I have had judges disallow the language in the PSA that grants the noncustodial parent the dependency deduction notwithstanding the language in the PSA and without having to show any change in circumstances.  Those judges relied solely on TD 9408.  For those cases, my client was not afforded any credit.  The logic was federal law trumps state law and that's it.  
    I have also had judges not enforce the dependency exemption clause due to TD 9408, but suggest that if the custodial parent does not execute Form 8332 (allowing the noncustodial parent to claim the deduction), the noncustodial parent would receive a credit for the amount of the loss.  


    Gregory Thomlison, Esq.
    Kerr & Thomlison, L.L.C.
    650 Washington St.
    Suite 1C
    Toms River, NJ 08753
    Ph. (732) 736-8100

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  • 4.  RE: Federal tax exemption

    Posted 02-09-2016 11:52 AM

    If a judge were to hold a PSA provision dividing the deduction to be invalid, I'd take it up: https://scholar.google.com/scholar_case?case=3940329832841174467 .


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    - Dave

    David Perry Davis, Esq.
    ----------------------------------------------------
       www.FamilyLawNJ.pro
    ----------------------------------------------------
    112 West Franklin Avenue
    Pennington, NJ 08534
    Voice: 609-737-2222
    Fax:    609-737-3222




    Original Message