Divorce & Taxes: What You Should Know
How Do Taxes Work When You Get Divorced?
When you get divorced, your whole life changes. Everything from your day-to-day routines to how you file your taxes looks different. This can be overwhelming and confusing, especially regarding your taxes. If this is your first tax season post-divorce, you may be wondering how you should file, married or as single? You may also be wondering what to do about any spousal or child support you are either paying or receiving.
Taxes are a common source of anxiety, especially for people going through a divorce. Don't worry; you aren't alone in this. At the Law Office of Greg Quimby, P.C., we know how stressful this time can be. Below we've provided some helpful information on filing your taxes post-divorce. Keep reading to learn more.
Should I File as Single or Head of Household?
Your first step is figuring out if you have to file as a married couple or as a single individual. If your divorce was finalized by December 31st, the IRS will consider you unmarried for that tax year, and you do not have to file jointly. Therefore, if your divorce was finalized on December 31st, 2021, you do not have to file jointly on your 2021 income tax return. However, say you divorced on January 3rd, 2022. You and your former spouse must then file as a married couple on your 2021 taxes. You will file as either single or head of household starting with tax year 2022.
After a divorce, your filing status changes. Where previously you may have chosen to file as married filing jointly or married filing separately, you no longer qualify for those filing statuses. Now that you are divorced, you will need to either file as single or as head of household. If you are the custodial parent of any shared children, you have the option to file as head of household. If not, you will file as single.
Note: you and your co-parent cannot both file as head of household for the same children. Children only qualify if they live with you for most of the year. If you and your co-parent share your children 50/50, the parent with the higher adjusted gross income can claim the child when filing as head of household.
Remember, claiming children for a head of household filing status is not the same as declaring a child as a dependent to qualify for important tax credits. If you are the noncustodial parent, you may still be able to claim your child as a dependent on your taxes. See below for more information.
Who Gets to Claim Our Children?
Post-divorce, only one parent can claim their shared child as a dependent and receive the associated deduction on their taxes. Generally, the custodial parent lists the child as their dependent (and files as head of household), but this is not always the case. The custodial parent can release the ability to claim the child as a dependent so that the noncustodial parent can take the exemption. This is done by filling out Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Parents who alternate who gets to claim the child each year will also use this form to transfer the ability to claim the child back to the custodial parent the following year.
Do I Have to Report Alimony or Child Support Payments?
For alimony agreements entered after 2018, alimony is no longer deductible by the person paying. Therefore the person receiving the support does not need to include spousal support when reporting their income. Additionally, according to the IRS, if your divorce decree was issued before 2019 but has been since modified and "the modification expressly states the repeal of the deduction for alimony payments applies to the modification," the alimony payments are likewise not deductible.
If your alimony order was entered before 2019 and has not been modified, speak with a certified tax preparer or account to determine if it is deductible/taxable.
Child support is also not deductible, nor is it taxable to the recipient.
Need help filing Form 8332? Have other questions about your divorce? Send us a message online to speak with an experienced divorce attorney.