Filing your own taxes can be difficult in any situation, but if you are currently filing for divorce during tax season, managing your finances can become even more complex. Divorce can change your financial situation significantly, especially if you receive or have to pay child support or alimony.
After years of filing taxes jointly with your spouse, you may wonder what status you should claim, or if there are any divorce-related tax forms or adjustments you may need to report. Once you understand the process, filing your taxes during or after a divorce is not as daunting as it may seem.
What Is Your Filing Status?
Your filing status is likely the first question that comes to mind when you prepare to file your taxes. However, the rules surrounding married versus single designations on tax forms are quite simple.
- If the court did not finalize your divorce on or before December 31st of the tax year, you must file your taxes jointly with your former spouse or as a married person filing separately.
- If the court finalized your divorce on or before December 31st of the tax year, you can file your taxes as a single person.
When it comes to head of household status, the rules are a bit more complicated. The IRS considers you legally unmarried if you and your spouse stopped living together on or before May 31st, and you paid for 51% of your household costs. To claim head of household status, you must also meet the following criteria.
- You have a dependent, such as a child or other relatives dependent on your income.
- You have the right to claim the dependent, in accordance with your divorce terms.
- You must file a separate tax return from your former spouse.
Can You Deduct Alimony and Child Support?
Prior to 2018, you could deduct alimony payments from your taxes and claim alimony as taxable income — but according to the recent Tax Cuts and Jobs Act (TCJA), alimony-paying spouses can no longer deduct these payments on their returns, and alimony-receiving spouses no longer have to report it. Child support payments are not deductible or taxable either.
Can You Claim Your Children on Your Tax Return?
According to the IRS, only one parent can claim their children as dependents per tax year. In some circumstances, your divorce agreement will outline the terms of your dependents. If you have multiple children with your former spouse, you may split the dependents between the two of you. If you have one child, either one spouse reserves the right to claim him or her as a dependent or you transfer this right by filing a form with the IRS each year.
If you and your former spouse cannot agree who will claim which children as dependents, the IRS implements some tiebreaker rules. First, the IRS looks at which parent the child in question lived with the most during the tax year. Whoever the child spent the most time with gets to claim him or her as a dependent.
If the child lived with both parents equally during the tax year, the IRS will look at the adjusted gross income (AGI) of each spouse. Whoever has the highest AGI will have the right to claim the child as a dependent.
If you are still struggling with filing your taxes during or after a divorce, speak to your attorney about any important information you need to know and schedule an appointment with a tax professional as soon as possible. Your attorney may be able to recommend a tax service that his or her former clients have used in the past.
If you do not have an attorney but are currently filing for divorce, contact one immediately. A divorce lawyer can provide a number of benefits for your divorce case, from protecting your interests during negotiations with your former spouse to helping you understand any child support or alimony negotiations.