Law Lessons from MICHAEL T. CANAVAN, JR. VS. ELISABETH JEAN CANAVAN, App. Div. (A-0010-08T2; Decided June 26, 2009):

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In Gwodz v. Gwodz, 234 N.J. Super. 56 (App. Div. 1989) it is acknowledged that it is proper for the Family Court to maximize income available for the support of children through use of the income tax child exemption. Id. at 61. Gwodz also acknowledges the Internal Revenue Code’s presumption that the custodial parent will retain the tax exemption, subject to waiver by the custodial parent. Id. at 62.

In considering “a request for change in the status quo respecting exemptions,” a trial judge must first determine the extent of child support provided by each parent. Ibid. If a change in tax exemptions is “deemed warranted,” the court must also consider whether modification of the existing support order is necessary to “reflect the benefits achieved by the change.” Id. at 62-63. The trial court, however, must also consider whether the change in exemptions “falls within the principles of Lepis v. Lepis, 83 N.J. 139, 149-53 (1980).” Gwodz, supra, 234 N.J. Super. at 63.

In Lepis, the Court required a showing of “changed circumstances” as a prerequisite to modification of a support order. Lepis, supra, 83 N.J. at 146. In other words, as a threshold proposition, plaintiff must establish a change in circumstances between the date of divorce and the date of his application because alternating the exemption is a significant alteration of the status quo.

By failing to pursue the issue when a divorce settlement was negotiated, plaintiff abandoned that right. A waiver is a “voluntary and intentional relinquishment of a known right.” Knorr v. Smeal, 178 N.J. 169, 177 (2003). It must be evidenced by a clear, unequivocal and decisive act from which an intention to relinquish the right can be inferred. Ibid.

Entry of the divorce judgment, which included provision for child support, custody and visitation, signaled an abandonment on plaintiff’s part of his claim to the exemption. The custodial parent is presumed to have the right to claim the exemption, and plaintiff was silent on that point at his only opportunity to raise the issue. Therefore, he abandoned his right to litigate the exemption. See Gotlib v. Gotlib, 399 N.J. Super. 295, 304 (App. Div. 2008).

[See related Blog Post, published in the New Jersey Family Law blog.]


Read:

1. A “Qualifying Child”, published by the IRS
2. “How much of a tax deduction does the IRS allow for tax exemptions?”, by Julian Block, published by WorldWideWeb Tax™.
3. “IRS TAX EXEMPTION FOR CHILDREN AND DIVORCE AGREEMENTS” by David A. Gabay

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See: IRS Form 8332: Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent

See related Blog Post published in the NJ Family Legal Blog.

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