Sean Callagy - Attorney and Entrepreneur: child support

Friday, June 10, 2016

Divorce & Taxes | Callagy Law | Paramus, NJ | Bergen County

The following article was written by Callagy Law’s Legal Team, and will focus on many common questions and concerns surrounding new developments, legal matters, the court system, and other procedures within the area of Family Law.

In the divorce context, all assets are not created equal and the Internal Revenue Service can alter what you thought were rather straight forward provisions for child support and alimony.

Consider the “child contingency rule” regarding alimony. IRS Publication 504 warns that if alimony payments are reduced or end around the same time as a child-related event, all alimony payments that were deductible to the payor and taxable income to the payee may be reclassified as child support instead of alimony. The payor would lose the deduction and pay retroactive taxes and the payee would receive a refund of taxes paid. A contingency relating to the child include (1) becoming employed (2) dying; (3) leaving the household; (4) leaving school; (5) marrying; or, (6) reaching a specified age or income level. This reclassification can be avoided if it can be established that any reduction in alimony was determined independently of a child-related contingency, which would be the normal circumstance. For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony.

Also consider the income tax burden of certain assets that are being divided up as part of a divorce settlement. Investment accounts that hold stocks, mutual funds, etc., may carry different tax basis which may result in different unrealized gains or losses which can result in significantly different capital gains taxes. Investment assets must be viewed on a tax-neutral basis to assure an equal distribution and sharing of capital gains taxes. The $1 million dollar investment account, which may have unrealized gains that will subject to capital gains taxes is not equal to $1 million in cash and an straight up off-set would be an unequal distribution of the assets.

Your family lawyer should have a grasp and understanding of these tax concepts and be able to navigate you through such issues to assure that the distribution of assets is fair and equitable.

Learn More About Callagy Law Here:

Divorce & Taxes | Callagy Law | Paramus, NJ | Bergen County #Alimony, #Assets, #CallagyLaw, #ChildSupport, #Divorce, #FamilyLaw, #Irs

Thursday, May 26, 2016

Imputing Income For Support | Callagy Family Law Blog

The following article was written by Callagy Law’s Legal Team, and will focus on many common questions and concerns surrounding new developments, legal matters, and other procedures within the practice area of Family Law, which include, but are not limited to, divorce law, child custody, child support, and prenuptial agreements. Our family law team members are also Certified Matrimonial Attorneys in the State of New Jersey. Our mission is to answer any questions and give knowledge to many different aspects of these matters.

An issue that often comes in the divorce context, particularly when attempting to establish child support and/or alimony obligations, is the accurate determination of a parent’s/spouse’s income. If a party is voluntarily underemployed or unemployed, then an income is appropriately imputed to that party. The question then becomes what level of income should be imputed to that party?

There are certain priorities that attorneys and judges will look to for imputing income to a litigant. First, the party’s work history, occupational qualifications, educational background and prevailing job opportunities in the region will be reviewed, evaluated and considered. A court may impute income based upon the party’s former income at that person’s usual or former occupation or the average earnings of such an occupation as reported by the New Jersey Department of Labor. The New Jersey Department of Labor categorizes employment fields and breaks down earnings in geographical segments. For example, Bergen, Passaic and Hudson Counties are grouped together for wage and employment statistics.

If potential earnings cannot be determined, income can be imputed based on the party’s most recent wage or benefit record. Finally, if a wage or benefit record is not available, income may be imputed based upon full-time employment at the New Jersey minimum wage rate.

In addition, in high income cases or where a party has an advanced degree, but has been out of the workforce for a period of time, an employability expert may be retained to provide greater detail and input as to a party’s employability and potential earnings. This almost becomes a job placement search and various market statistics and research tools are utilized to canvas the region for potential and available job opportunities based upon the person’s educational and employment background.

It is also noteworthy that, when young children are involved, the costs of work-related day care necessary for a person to work outside of the home or obtain full-time employment will be deducted from the imputed income for child support purposes. This is important when dealing with an imputed income that is marginally more or even less than the costs of child-care. If it will cost more in child-care then the person can earn, other alternatives need to be considered.

The Team at Callagy Law hopes the information in this article was helpful in either your personal or professional life.. Callagy Law, is a multidisciplinary law firm, headquartered in Paramus, NJ owned and operated by Sean Callagy. We are committed to providing legal representation and advice to our clients at additional law offices located across the United States. Please note that the information posted here should not be used as a legal argument of defense. If you find yourself needing legal advice pertaining to your unique situation, you can contact us at here. Feel free to search us on Facebook, Twitter or LinkedIn! Additionally you can subscribe to our daily videos on YouTube.