Learn how Washington divorce affect federal tax filing, dependency claims, and parenting plans in Seattle and King County.
Washington does not have a state income tax, divorce orders entered in King County and throughout Washington can directly affect how you file federal taxes. Parenting plans, child support orders, and spousal maintenance provisions often determine who may claim dependents and how financial responsibilities are structured.
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. It’s a good idea to consult with a CPA early to be sure you can get the assistance you need before filing day.
Below are issues to consider and discuss with a tax professional:
How does a separation or divorce affect taxes?
Make sure you understand your filing options. According to the United States Internal Revenue Service (IRS), an individual’s filing status is dependent upon whether 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. Discuss with a CPA whether it’s advantageous for you to file married filing jointly, married filing separately, or head of household. Be sure you have agreement from your spouse (or ex-spouse) so you can cooperate to exchange necessary information. Address this with your attorney if you and your spouse cannot agree.
According to the IRS, most couples will find that filing jointly as a married couple lowers their taxes and saves them money. However, if you are separated and earn less than your spouse, ask a CPA if you would benefit from reporting only your own income and expenses and for paying only the taxes you owe. You may discover it’s beneficial to file married filing separately. If this is beneficial for you, it may not be for your spouse – again, ask your attorney to negotiate this issue.
The IRS has specific requirements to file as the head of household. Ask your CPA if you meet the criteria. Determining factors may include the following:
- Your date of separation
- Who paid to for the upkeep of your home for the year
- Where your dependent child(ren) lived during 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.
You and your ex-spouse need to know who can claim your 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. The designation of which parent can claim the child(ren) as dependents each year should be made in your child support order. If you have more than one child, it’s possible for each parent to claim a dependent; again, this should be designated in your divorce orders.
Discuss with your CPA how the ability to claim dependents will affect head of household filing status, the child tax credit/credit, the dependent care credit/exclusion for dependent care benefits, the dependency exemption, and the earned income tax credit (EITC).
If you are the non-custodial parent, ask your attorney about the ability to claim your children as dependents in some years. Then, ask you CPA about the IRS’s specific provision regarding noncustodial parents with the ability to claim the dependency exemption and the child tax credit/credit for other dependents.
In Washington, the right to claim a child as a dependent is typically addressed in the final divorce decree or parenting plan. If the court order is unclear or silent on this issue, it can create conflict at tax time.
After a Washington divorce is finalized, your filing status and dependency allocation may change from what you used during marriage. Failing to update withholding can create unexpected tax consequences that complicate your post-divorce financial transition.
I am Custodial Parent, and my ex is claiming our children as dependents, what can I do?
If your ex spouse files their taxes before you and claims your children as dependents, talk to your family law attorney. You don’t want to be in a situation in which the IRS rejects your deductions for your own children.
Common Mistakes
One common issue we see in King County divorces is parents assuming they can alternate claiming children without clearly documenting that agreement in their court orders. Informal agreements often lead to IRS disputes later.
Can I deduct legal fees when filing taxes after divorce?
There are specific IRS rules regarding legal fees, property, and spousal support in divorce. Ask your CPA to be sure you are not claiming expenses that are prohibited by the IRS. Generally, assets transferred from one spouse to the other in a divorce are not taxable. Likewise, divorce expenses are generally considered personal expenses and not deductible.
Questions About Divorce and Financial Planning in Washington?
Divorce has financial ripple effects that extend beyond the courtroom. If you are navigating separation, mediation, or a finalized divorce in Seattle or King County and have questions about how your court orders affect tax filing or dependency claims, our team at DuBois Levias Law Group can help you plan strategically. Contact us to schedule a consultation and protect your financial stability during this transition.
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.
FAQs: How To Handle Tax Returns if You’re Divorced or Separated
1. How does a separation or divorce affect my tax filing status?
Your tax filing status depends on whether you are married or unmarried on the last day of the year. If your divorce is not finalized by December 31, you must file as married, but you can choose between filing jointly or separately. Consult a CPA to determine the best option for your situation.
2. What are the benefits of filing jointly versus separately during a separation?
Filing jointly as a married couple often lowers taxes and saves money. However, if you are separated and earn less than your spouse, filing separately might be more beneficial. A CPA can help you evaluate your options.
3. Can I file as head of household if I’m separated?
To file as head of household, you must meet specific IRS criteria, such as your date of separation, who paid for the upkeep of your home, and where your dependent children lived during the year. A CPA can help determine if you qualify.
4. Who can claim the children as dependents after a divorce?
Only one parent can claim a child as a dependent for tax purposes. This designation is typically outlined in your child support order. If you have multiple children, each parent may claim one, depending on the divorce agreement.
5. What tax credits and exemptions are affected by claiming dependents?
Claiming dependents can impact your eligibility for head of household status, the child tax credit, the dependent care credit, the earned income tax credit (EITC), and more. Discuss these with your CPA to understand the implications.
6. Can a non-custodial parent claim dependents?
In some cases, non-custodial parents can claim dependents if specified in the child support order. The IRS has specific provisions for this, so consult your attorney and CPA for guidance.
7. Should I update my W4 after a divorce?
Yes, update your W4 to reflect your new filing status and the number of dependents you are claiming. This ensures accurate income tax withholding and helps avoid unexpected tax bills.
8. What should I do if my ex claims our children as dependents before I file?
If your ex claims your children as dependents before you file, consult your family law attorney. The IRS may reject your deductions if this issue is not resolved.
9. Are legal fees from a divorce deductible on my taxes?
Generally, legal fees related to divorce are considered personal expenses and are not deductible. However, there are specific IRS rules regarding legal fees, property transfers, and spousal support. Consult a CPA for clarity.
10. Can I deduct spousal support or property transfers on my taxes?
Assets transferred between spouses during a divorce are typically not taxable. Spousal support may have specific tax implications, so it’s best to consult a CPA for accurate advice.