When you file for divorce, your legal marriage is over. However, you are still responsible for federal income tax. If you have a divorce that is final on or before December 31st of the tax-filing year, then the IRS views you as being single for the entire year. Because of this, it’s not possible to file a joint return, like you may have in the past.
The fact is, after divorce, there are more than a few things you must consider about your tax situation. If you need help, you can count on Griffin Family Law to provide the guidance you need. You can also use the information here to better understand the impact of divorce on your tax situation.
It’s Necessary to Select a New Tax Filing Status
When your divorce is final, you cannot file your taxes with the status of “married filing separately” or “married filing jointly.” In this situation, you must consider how you qualify and then pick either “head of household” or “single.”
If you qualify as the head of household, this can provide you with numerous advantages compared to filing with a single status, which includes a bigger standard deduction, a reduced tax rate (in some cases), and some tax credits. However, the only way you can file with the status of head of household is if you meet these qualifications:
- Your divorce is final by December 31st for the year you are filing a tax return.
- You have proof of paying a minimum of 50% of the costs used to maintain and keep up the home for the tax year you are filing.
- There is a “qualifying person” who resided with you for a minimum of 50% of the time or who has met the other requirements.
After your divorce is final, it’s not possible for you and your ex to file as a head of household just because of shared care and support for your children. A child is not considered a qualified person by anyone but their custodial parent (this is the person who the child is living with for most of the year).
If parents have equal, shared custody of a child or children, then the one that has a higher adjusted gross income has the right to claim the child on their taxes. Usually, your divorce decree will tell you who the custodial parent is.
A noncustodial parent, who is the one who the child resides with only part of the time, cannot use their child as a reason to claim head of household on their taxes.
Determining Who Will Claim Your Dependent Children
Only one parent can claim their children after a divorce. Usually, the parent who receives this deduction will be the custodial parent. However, exceptions are possible.
However, it’s still beneficial for a custodial parent to claim their child as a dependent because this allows them to claim head-of-household status. They will be eligible for specific tax credits and other deductions.
Reporting Child Support and Alimony Payments
You may be ordered or agree to pay your ex-spouse alimony when creating your divorce decree. You may also have to pay child support. If money is changing hands in either of these situations, you need to understand how it will impact your taxes.
If you can deduct the alimony, you pay, or if you must include the payments as part of your gross income, it depends on if your divorce has been finalized. If you aren’t sure what you need to do, you can contact our legal team or speak to an accountant who can provide more information.
Child support has never been tax deductible because it was never considered as income tax. This has not changed.
Handling the Sale of Your Home
When you divorce, it means you will separate your home into two different households in most cases. This may include selling your home. You may choose to sell your house. If this is the route you take, and you sell it for a profit, it can impact both your taxes, and you may owe capital gains taxes. However, when you divorce, you may qualify to exclude some of those gains, which lets you avoid a large tax bill.
Griffin Family Law is Ready to Help
When it comes to your tax situation after a divorce, there are more than a few factors to consider. If you need help or have questions, be sure to contact Griffin Family Law. We will help you handle your new tax situation and avoid issues.
