What Are The Tax Consequences Of Child Support?

1. Law Lessons from HARRIS v. KELLY (App. Div., A-3178-04T1, March 22, 2006, not approved for publication):
   
   The Internal Revenue Code has, since at least 1985, assigned the right to claim a child as a tax exemption to either the custodial parent or the parent supplying more that half of the child's support. 26 U.S.C.A. § 152(e)(1).
   
   The Code, however, has always permitted the assignment of the exemption. Id.
   
   The court has the equitable authority to allocate the tax exemption by compelling the party entitled to the exemption to execute the assignment described in the Code. Gwodz v. Gwodz, 234 N.J. Super. 56, 60-62 (App. Div. 1989). That power, although discretionary, requires consideration of several factors that were described in Gwodz. Id. at 62-63. Those considerations include: (1) whether the law respecting the allocation of exemptions has changed since the establishment of the support order and whether the principles of Lepis v. Lepis, 83 N.J. 139, 149-53 (1980), relating to changed circumstances, are implicated by the request for an allocation of the exemption; (2) the extent of the support actually provided by each parent; (3) whether a change in allocation of the exemption will maximize the net income available for support; (4) whether the existing support order should be modified as a result of the increased income available to plaintiff if he is to obtain the benefit of the exemption.



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