The first couple of years after a divorce can be challenging for New Jersey residents, especially those who share children with a former spouse. For same-sex couples with kids, determining which parent has the right to claim the children as dependents on their taxes isn't always easy. That's especially true for parents who share custody after a divorce.
The best way to address this matter is to clearly spell out which parent is entitled to tax credits within the divorce agreement. If that does not take place, there are guidelines that can help parents determine the proper course of action. Residence is a big factor, and the parent who cares for the kids most of the time has a greater claim to tax credits. Of course, if custody is shared equally, this may not be a simple matter.
In cases of shared custody, the parent with the highest adjusted gross income, who is also covering most of the costs of caring for the child or children, will usually retain the right to claim the kids as dependents. This can also be a point of contention for parents who make an effort to share costs equitably. It's important to try and work things out before tax time, because if two parties both claim kids as dependents, one will have his or her return rejected.
For those same-sex couples moving through a divorce in New Jersey, addressing tax credits should be part of the negotiation process. It's possible for parents to share those credits by alternating years to claim children as dependents. That can make a great deal of sense for some couples, but it does require a degree of collaboration both during and after the divorce.