Posted by Karen Munoz, EA

Important Tax Tips When Filing for Divorce or Separation

Important Tax Tips When Filing for Divorce or Separation

Going through the process of divorce or separation can be a very difficult time. Consider these tax tips for avoiding mistakes with the IRS.

The process of divorce or separation is a difficult time for any couple. Many people can also forget about the tax implications between property division, legal proceedings, and child custody. You can avoid mistakes with the IRS, especially if there is a communication breakdown between the spouses, by considering a few tax tips.


Choose the right marital status.

You may consider your marriage over when your spouse moves out, but in most cases, the IRS continues to treat you as a married person as long as you are legally married on the last day of the fiscal year your tax is due. Generally, unless you have a final divorce decree on hand, you cannot file as single or head of household, even if your spouse does not live with you.

In most cases, you only have two options during the divorce or separation process:

  • File as married filing jointly.

  • File as married filing separately

In some cases, communication with your spouse may have been severed, so all you need to do is file a separate tax return. Or you may suspect that your spouse is not reporting income to the IRS to avoid disclosing their actual income in the divorce action.

Usually, signing a joint return makes both spouses liable for failure to file taxes and fines, so you can choose to file the return separately to avoid this potential problem.

Married couples who file separately often lose access to key credits and deductions that reduce tax debt, including:

  • Child and dependent care credit

  • Earned income credit

  • Educational deductions and credits

  • Student loan deduction


File under your married name

While you may want to change your married name to your maiden name or add that hyphen, it may be best if you hold on a bit; if you do so on your tax return before your name is legally changed, it could delay your refund.

The IRS checks your name against your registration with the Social Security Administration (SSA). If your tax return is due and your name has not been legally changed, file with your married name until the name change is official.

When you are ready to change your name, notify the SSA of the name change, if necessary. You can then use the new name to file your tax return.

When you are ready to change your name, notify the SSA of the name change, if necessary. You can then use the new name to file your tax return.


Decide who claims the children.

If you decide to file a separate tax return, try to decide ahead of time with your spouse, claiming your children in the tax return. A parent with sole physical custody usually has the right to claim the child.

But if your spouse has not yet moved, there may be confusion about who has the right to claim the child. You might be even more confused by shared custody agreements. It is best to agree in advance with who will claim the child or children.

You can also agree to assign a child's dependent status to the non-custodial parent who doesn't have IRS Form 8332 for several reasons. However, the tax benefits are better because your spouse has a higher income.

Claiming a child as dependent on multiple tax returns will usually mark the returns in the IRS database and will often trigger a review of both parents' returns.


Do not classify interim support as alimony.

Although you have moved out of your home or filed for a divorce, payments made to support your spouse before the divorce is complete are not considered alimony by the IRS unless you comply with a court order.

Alimony payments are generally deductible by the person making the payments, and you may feel eligible for some tax benefit following the separation of the spouse. However, the IRS only allows the deduction if the child support payments were described in a written separation or divorce agreement.

For divorce agreements concluded after 2018, alimony will no longer be deductible to the person paying it and will not be taxable to the person receiving it.


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Karen Munoz, EA
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