How do you file my taxes after you get divorced? Am I married or single?
Do I have to file taxes with my husband or wife if we are separated?
How do I file taxes if the divorce is not finalized?
Should I file head of household in the year I file for divorce?
Who can claim children as dependents?
What is the tax treatment of alimony and child support?
Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), alimony payments were deductible from the income of the payer (excluded from the alimony-payer’s taxable income). However, the recipient (present or former) spouse would then be required to include the payment as taxable income. On the other hand, the party who pays child support is not able to deduct the child support payments from their income and the receiving party does not include the payment in their taxable income.
TCJA has essentially reversed the stage at which tax is collected for alimony, making its tax treatment just like child support. Alimony payments are no longer deductible to the payer (so they are included in taxable income of the alimony-payer), and the alimony payments are no longer included by the recipient as taxable income. This is in effect as of January 1, 2019.
Although the tax treatment for child support has not changed (meaning alimony and child support are treated the same), there has been another tax change which parties to child support agreements may find significant. The Tax Cuts and Jobs Act has done away with personal and dependent exemptions. This may be relevant to your situation if your existing agreement or order contains a provision which establishes which parent may declare minor children as personal/dependent exemptions on their tax returns, as many do. As of January 1, 2018, these provisions in your agreement no longer matter. Regardless of which parent gets the right in the agreement, neither parent will be able to declare any children as exemptions on their federal return because as of January 1, 2018 due to the elimination of personal/dependent exemptions.
What is the taxability of property transferred in a divorce?
In practice, this means that if the transfer takes place within a year it is tax-free no questions asked. If the transfer occurs at some point past the year marker (but before the divorce’s six-year anniversary), you are not completely out of luck; however you will likely have to jump through some evidentiary hoops to prove that the transfer was related to your divorce. This means that if the transfer was not included in your divorce agreement, you may need to modify it to avoid tax liability if the transfer occurs between the first and sixth anniversary of divorce. After six years, a tax-free transfer is not totally impossible but considerably more difficult because there will now be a presumption working against you that the transfer of property has nothing to do with the divorce. At that point, there really must be extenuating circumstances such as business or legal disputes relating to the property which explain why the transfer could not occur sooner.
Can I deduct my legal fees for a divorce? What if part of it has to do with my business?
What is community property and how does it impact my tax filings?
This is in contrast to separate property. Separate property is generally defined as property acquired before marriage; or during marriage through gift, inheritance, or an award for personal injury damages. These are not hard and fast rules, and we strongly recommend that you look to your state’s laws or speak to qualified counsel for advice on the characterization of property.
Whether property is characterized as community or separate has significant implications on how you must file your taxes, if you married filing separately. Spouses may have both community and separate property, respectively. To complicate matters a bit further, a single item of property may contain an interest that is owned by the community property estate and an interest that is owned as separate property. Because assets can change from separate property to community property under certain circumstances, it may be difficult to figure out how to report any income earned or asset appreciated under community property. In order for each spouse to report and pay their share of tax liability, you will need to determine exactly what interest each person has in the property.
For spouses filing a joint return, whether property is characterized as community property is less significant. This is because spouses who file a joint tax return are joint and severally liable for the tax on all of the income reportable, regardless of whether it is community property or separate property. Because this means that your own personal assets could be used to pay the entire liability stemming from a joint return, you may want to take this into consideration when deciding whether to file jointly or separate.
How are retirement accounted treated for tax purposes in a divorce? (Pub. 504)
Following the letter of the law, there may be penalties involved in accessing these funds early, even in compliance with a court order. The IRS has recognized the unfairness, and have given out Private Letter Rulings (PLRs) which have helped taxpayers who would have otherwise taken a large hit on their hard-earned retirement funds. Technically, PLRs are not supposed to be a source of authority to rely on. However, there have been quite a few on this topic which may give a taxpayer in this position room to avoid the penalty. Because of the grey area involved, we strongly suggest you seek experienced counsel to guide you through the process.
How are property transfers treated in a divorce? (Pub. 504)
What happens to tax debt in a divorce?
What happens if we owe taxes while getting divorced and my husband or wife stops paying?
I suspect that my spouse cheated on our tax returns while we were married. How do I handle this now that we are getting divorced?
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Last updated: March 25, 2023
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