Accurate income records are essential to child support calculations. Complicated tax forms or employment situations can make it difficult to gather the information needed but, by using CIS, NJ lawyers can simplify the process. The process depends on how the couple filed their taxes last year.
Individual Tax Returns
Couples often separate before seeking divorce. During this time they are living independent lives, earning independent incomes, and incurring independent expenses. In this case all the attorney needs to do is get each person’s income and tax records.
In the Case Information Statement software under Part C, Section 1 you’ll see two buttons: “Income/Tax Calc” and “Tax Allocation”. For individual tax returns, click “Income/Tax Calc” to open up a dialogue that allows entry of each spouse’s W-2 forms. You can enter wages and taxes from up to three W-2 forms for each spouse, as well as entering the tax refunds for each person.
If either spouse earned significant income from sources other than W-2 salaries then you will need to use the Joint Tax Return method below even if they filed separately. This income could include self-employment, alimony from a previous relationship or pensions.
Joint Tax Return
The couple might have filed a joint tax return because they were still living together or for other reasons. In theory you could still use the procedure above, entering each spouse’s W-2 forms and the total state and federal taxes paid or refunded. However doing so will split taxes paid and refunds equally between both spouses. This might be an acceptable estimate if they both made roughly the same salary but won’t be accurate if their incomes differed.
A better option is to click on the “Tax Allocation” button to open up a dialog that allows you to enter detailed information from the joint 1040 form. Although this form is more complicated, it doesn’t take long to fill out and will give a more equitable distribution of taxes, by dividing taxes based on each spouse’s income percentage. The data will automatically be transferred to the New Jersey CIS for accurate child support calculations.
Features like these income calculators are one of the reasons you want to use dedicated legal practice management software rather than trying to use generic financial software. We have worked with our attorney clients to add the features you need to simplify and automate your practice. Find out more about CIS’s extensive features by exploring our website.