Income Tax Exemptions for Children

By:  Lauren Hagovsky, Esquire

In New Jersey it is quite common for parents who share joint legal custody of their children to also share the right to claim them as a tax exemptions on their federal and state income tax returns under a provision of their marital settlement agreement. Divorced or non-married parents typically equally split the available exemptions for children; each parent claims one child and/or they alternate claiming the exemption(s) by year. In an unreported decision, Zeitlin v. Zeitlin, decided on December 19, 2014, the court held that the family court may suspend a non-custodial parent’s right to claim a child dependency exemption when their accrued child support arrears remain unpaid at the end of the year. The court based their conclusion of the following three reasons:

  1. There is a logical and unequivocal relationship between the child dependency exemption and the parental child support obligation. The right to claim the exemption is intertwined with duty to pay support; therefore, accumulating substantial arrears is a breach of this relationship.
  2.  The non-custodial parent’s accrual of significant child support arrears is a change in circumstances warranting equitable relief under Lepis v. Lepis, 83 J. 139 (1980).
  1. Rule 5:3-7(b) states as follows: On finding that a party has violated an alimony or child support order the court may, in addition to remedies provided by R. 1:10-3, grant any of the following remedies, either singly or in combination: (1) fixing the amount of arrearages and entering a judgment upon which interest accrues; (2) requiring payment of arrearages on a periodic basis; (3) suspension of an occupational license or driver’s license consistent with law; (4) economic sanctions; (5) participation by the party in violation of the order in an approved community service program; (6) incarceration, with or without work release; (7) issuance of a warrant to be executed upon the further violation of the judgment or order; and (8) any other appropriate equitable remedy.

The court ruled it appropriate and equitable to suspend the delinquent parent’s right to claim the child dependency exemption.  In this particular case, the non-custodial parent was $10,511.00 in arrears as to his child support obligation as of December 16, 2014. The court granted plaintiff’s request to be able to claim both of the parties’ children on her tax returns unless and until further ordered.

Which Pre-School? Which Parent? (Beck or Pascale?)

By: Lauren E. Hagovsky, Esq.

In the recent Appellate Division case, Madison v. Davis, 438 N.J. Super. 20 (2014), the parents entered into a marital settlement agreement whereby they agreed to share joint legal custody of their three-year-old daughter. Mom was designated as the parent of primary residence. The parties agreed to equally share the cost of future work-related childcare and for Dad to be added as an emergency contact at “any school and/or day care provider” and, once the child was of school age, he would be authorized to obtain all information directly from the school.

Less than four months after the divorce was finalized, litigation ensued when Mom unilaterally changed their daughter’s day care provider to another pre-school. Dad filed a motion asserting that Mom violated his parental rights by unilaterally switching their child’s preschool without his authorization. Dad relied on the principles of Beck v. Beck, 86 N.J. 480 (1981), which defined joint legal custody as giving both parents equal decision-making regarding their children’s care, education and welfare. Mom relied on the principles of Pascale v. Pascale, 140 N.J. 583 (1995) in which the primary residential parent is generally in charge of arranging alternative care, such as babysitting or daycare, and has autonomy to make day-to-day decisions about the child.

The court noted that pre-school is not purely “school,” nor is it purely “daycare;” rather, it is a hybrid between the two. In New Jersey pre-school is not mandatory but an elective option for parents. However the judge recognized that it serves a dual purpose: 1) to provide responsible care during normal work hours, and 2). To provide meaningful education and socialization for the child. The court also decided that it could not strictly apply Beck nor Pascale, but instead would do a hybrid analysis.

The court set forth a 7-step analysis and principles to determine the parties’ dispute.

  1. The parent of primary residence (PPR) has the initial right to select a program if it is being used extensively for work-related day care.
  2. The PPR’s selection must be reasonable, considering the cost, location, accessibility, curriculum, etc.
  3. The PPR has an obligation to provide notice of any proposed change in provider within a reasonable time to the parent of alternate residence (PAR).
  4. The PAR has the right to investigate the proposed program. If the PAR does not agree, the PAR may apply to the court for a ruling. In such case, the PAR has the burden to show that the PPR’s selection was unreasonable.
  5. If the PAR decides to challenge the proposed pre-school, a reasonable alternative plan must be included in the PAR’s court application.
  6. The court may decide to override the initial proposed pre-school and order different arrangements or may determine it is reasonable and allocate the cost between the parties.
  7. Counsel fees may be awarded if the judge determines that a party was acting unreasonably.

Ultimately, this process combines the principles of Beck and Pascale and continues to focus on and promote the best interests of the child. In applying the analysis to this case, the court found that Mom exercised reasonable parental discretion in her decision to change the child’s pre-school based on the cost, location and services offered. The court further found that Dad had the right to bring his objections to the court, but in this particular case, he failed to show that the transfer was unreasonable or burdensome on the child and the parents.