Taxes After Divorce: A Few Key Points

Form 1040 U.S. Individual income tax return with a yellow number 2 pencil, calculator, and a red pair of glasses arranged on top of the form

Taxes After Divorce: A Few Key Points

A lot can change in a year that may ultimately affect how you do your taxes. From buying a new house to having a new baby, there are many new things that can come into your life or happen to you in a matter of months. With the odds of marriages ending up in divorce remaining at an alarming rate, the process for filing taxes will be a little different (and possibly more difficult) than usual for a great amount of individuals this year.

For new divorcees, there are various factors that need to be considered while preparing and filing taxes; some may be easy to deal with and others not so much. To educate and prepare yourself for what’s to come, we’ve list a few key points.

1. Status

Determining your current filing status is probably the most important, and initial, factor that you will have to look into before you even start your taxes. Depending on when you filed for divorce or your current marital status, you will have a choice between filing as single or married. Those whose divorces were legally finalized on the last calendar day, had a legal separation, or lived in separate households for the last six months of the tax year are expected to either file as “single” or as a “head of household.” If none of these factors apply to you and you were still legally married at the end of the year, the only other filing status’ you have to choose from are “married filing jointly” or “married filing separately.”

2. Tax Refunds

If you have decided to file jointly with your soon-to-be-former spouse, obtaining your tax refund might be a little tricky. For this reason, it is important to know the exact amount of how much you should be expecting back from your tax refund and to communicate this information with your partner that you filed with. Back up your calculated amount with documentation if you need to. Being that a lot of divorcing couples tend to have a hard time communicating with each other, it may be in your best interest to look into hiring a professional to take care of all the tax filing matters for the both of you. Not only will this ensure accuracy, but you’ll both end up with the proper amount from your tax refund and the middle-man will work as a buffer between the two of you.

3. Claiming Children and Dependent Exemptions

Generally speaking, the parent in most divorce cases who is the primary caregiver is the parent who claims the child or children. However, this does not always have to be the case. In certain situations, the parent who makes a greater income is chosen to claim the children to utilize their greater tax break. In some situations, parents take turns claiming their children (typically every other year). Even so, to even be eligible to claim a child, that child must live with you for more than half the year and be younger than 19 on December 31st of the tax year. That is, unless, your child is a full-time student under the age of 24.

4. Alimony & Child Support

2019 tax reform has changed how the IRS treats alimony. For divorces finalized after Dec. 31, 2018, you will no longer be able to deduct the spousal support that you pay to your ex-spouse. However, if you are  the recipient of alimony payments, you will no longer have to include those payments in your taxable income.

When it comes to child support, this regulation does not apply. Those who receive child support do not have to worry about paying taxes on the money they receive and those who pay it can not utilize it as a deductible.