How to File Income Tax Returns if You’re Divorced or Separated

Unless you were filing separate tax returns as a married couple, your new filing status as a newly single person will come with some new financial decisions along with some additional paperwork.

We’ve got tools and resources to help you understand the differences and help you toward your new, brave beginning. 

How does a separation or divorce affect taxes?

According to the United States Internal Revenue Service (IRS), an individual’s filing status is dependent upon whether or not you are married or unmarried on the last day of the year. 

If your divorce was not finalized by December 31 of the year in which you’re filing taxes, you must file as married. But that doesn’t mean you have to file jointly with your ex-spouse. You can choose any of the following filing statuses: married filing jointly, married filing separately, or head of household. 

When filing jointly as a married couple, you combine both individuals’ income and deduct your combined allowable expenses. According to the IRS, most couples will find that filing jointly lowers their taxes and saves them money.

If you choose to file separately but are married, you’ll only be responsible for reporting your own income and expenses and for paying the taxes you owe. 

You could also choose to file as the head of household, but you must meet all of these criteria to qualify: 

• Your spouse didn’t live in your home for the last 6 months of the year
• You paid more than half the cost of keeping up your home for the year
• Your home was the main home of your dependent child for more than half the year

If your divorce wasn’t finalized by the last day of the year, it’s smart to consider with your spouse and attorney the best route for filing taxes. Property, assets, alimony, and retirement accounts can be affected by taxes during or after a divorce. 

Who can claim our children as dependents?

When filing your taxes after a divorce, only one individual can designate a child as a qualifying dependent for various tax purposes like the head of household filing status, the child tax credit/credit for other depends, the dependent care credit/exclusion for dependent care benefits, the dependency exemption, and the earned income tax credit (EITC).

Keep in mind there is a specific provision for divorced or separated parents or parents who have lived apart for the last six months of the calendar year. In these cases, the parent with custody of the child, referred to as the “custodial parent,” can provide the parent without custody, the noncustodial parent, with a written declaration granting them the ability to claim the dependency exemption and the child tax credit/credit for other dependents. If the conditions of this rule are met, the child is then considered the qualifying dependent of the noncustodial parent for the purposes of the child tax credit or credit for other dependents, as well as the dependency exemption.

Only the custodial parent is eligible to claim the head of the household filing status, the dependent care credit/exclusion for dependent care benefits, and the EITC for the child based on the general rules.

Update Your W4

The deductions on your W4 will need to be updated with your employer to reflect your status as custodial or noncustodial parent. You definitely don’t want a surprise tax bill at the end of the year because you can no longer claim your children as a deduction.

I am Custodial Parent and my ex is claiming our children as dependents, what can I do?

If your ex files their taxes before you, and claims your children as dependents, the IRS will reject your deductions for your own children.

Can I deduct legal fees when filing taxes after divorce?

You cannot deduct legal fees when filing taxes after divorce since they are considered personal expenses, and the deduction of these fees is prohibited by the IRS. Still, you may be eligible to deduct attorney fees relating to receiving alimony or property.

Our tools, resources, and support can help you make this transition smoothly and ease the stress that tax season brings.

Please note that this blog does not provide tax advice. We recommend you consult a tax professional to determine the appropriate steps to filing your tax return.