Taxes After Getting Divorced

divorced couple with tax professional

Getting divorced is a big change. Your taxes after getting divorced are going to change too. Whether you get divorced on the first day of the year, the last day of the year, or sometime in between, you are considered divorced in the eyes of the IRS if you are legally divorced or separated on the last day of the year. You can no longer file as married filing jointly or married filing separately but must look into the other options available to unmarried people, which include single or head of household.

If you’re still in the process of getting a divorce on the last day of the year and you do not yet have a divorce or separate maintenance decree, then you are still considered legally married, even if you are no longer living together. In this case, you must choose married filing jointly or married filing separately, though in some cases you may be able to use head of household.

Alimony, Child Support and Other Money Matters

With divorce come some financial adjustments that could affect your taxes. Typically, one person will pay alimony and/or child support to their ex-spouse after a divorce is final.

Alimony: Alimony is financial support paid to an ex-spouse to cover monthly expenses. In terms of taxes, if the divorce occurred after December 31st, 2018, alimony payments are not deductible by the payer and not included in income for the recipient.

**Keep in mind: State tax laws often differ from federal laws when it comes to alimony and child support.

Child Support: Child support is separate from alimony and is paid from one ex-spouse to the other to assist with a child’s living expenses. Like alimony, these payments are not deductible by the payer and not included in income for the recipient.

Residence: If you and your spouse owned a home together and one spouse will be keeping the house, the home can typically be transferred without a gain or loss. The transfer must occur within one year of the date of the divorce or within six years of that date if stated in a divorce agreement.

Can Both Divorced Spouses Claim Children as Dependents?

Typically, no. Only one parent can claim a child as a qualifying child in terms of taxes. The parent that can claim the qualifying child is usually the parent that child lives with for most of the year. If the child lives an equal amount of time with both parents, the parent with the higher adjusted gross income is the one that can claim the child.

Taxes After a Divorce in California

Sometimes state tax laws are different than the federal tax laws. This is true of alimony in the state of California where alimony payments are deductible for the payer and considered taxable income for the recipient. On the other hand, child support is treated the same in California as it is on a federal level.

Divorce can make your taxes seem overwhelming. Not to worry, we can help. Contact a tax preparer today.