www.taxprofessionals.com - TaxProfessionals.com
Posted by Rosovich & Associates, Inc.

Basic Tax Rules to Keep in Mind if You are Recently Separated or Divorce

Basic Tax Rules to Keep in Mind if You are Recently Separated or Divorce

There are essential things to keep in mind during legal separation and divorce. First, the act changes not only relationship status but also taxes. A married couple will continue to file their taxes as married to the IRS until they present a final petition of divorce post-separation maintenance. This period is emotionally tense but may be worse if you don't know the basic tax rules when filing for a separation or divorce. 


Update Relationship Status

For recently divorced or separated couples, the IRS expects you to report your taxes on Form W-4 through your employer to have a share of the withholding. In the case of alimony, the IRS expects an estimated tax payment. 


When the IRS Recognizes Your Divorce

The IRS considers you to remain married if you have not presented the final document of divorce or separation by December 31 of the tax year, even if the process started at the beginning of the year. However, you can be considered unmarried even when the court issues the divorce decree on December 31. You won't be able to file a married return. You can check the guide and convictions on IRS Publication 501 appeal concerning divorced and separated taxpayers. This guide and conviction present steps to take to be eligible to be considered unmarried.


Update filing status

Divorcing or separating couples who have not finalized their stand before the year ends are still married, meaning they have to decide on a filing method for their taxes. Here are some filing statutes a recently separated or divorced people can use:

  • Married filing jointly is filed using the joint return filing status allowing married people to deduct their combined expenses and file their combined taxes. The taxes are usually lower rates compared to filing separately. 

  • Married filing separately using the separate filing method on their income, deductions, and profits are filed individually. Each spouse file returns according to individual earnings. 

  • Head of household. The head of household is eligible for a few separated or divorced persons if you meet these requirements.

    • Your spouse has not been living with you for half of the year.

    • You contribute half or more for home upkeep.

    • Your home was the child's living space for more than six months.

  • Single. Once you receive the court decree, taxpayers can file their tax return as a single for the tax year unless they meet the requirements to report their taxes as head of household or remarry before the year-end.

Taxation in the year of separation

The taxes imposed on recently separated or divorced people will depend on how much they were taxed when married. Here is how taxes will be filed.

  • If they were taxed as a single person, the tax statute would not change. 

  • If they were taxed separately, the IRS would assess all income until the separation date, and they can transfer any unused tax credit and rate they attract. However, after separation or divorce, each person can file a single person's taxes which will attract the single person's tax credit.

  • The joint assessment is filed by one spouse, who is considered the assessable spouse.

As an assessable spouse, you enjoy the privilege of taking the other spouse's tax credit and double rate bands for that year of separation. In addition, you receive individual taxes for the whole year and your partner's income for the year. The non-assessable spouse will also receive individual tax till the separation date. After that, you'll be covered under the single person's tax credit and tax under single rate bands. However, you can choose to remain under married couple tax if you have legal maintenance payments.




Rosovich & Associates, Inc.
Contact Member