Recently separated or divorced from your spouse?
Considering a break-up?
Here are some important tax rules to keep in mind:
1. You’re still considered married by the IRS if your divorce is not yet final as of December 31, even if you or your spouse filed for divorce earlier in the year.
2. If the court issued your divorce decree on December 31, then you’re considered unmarried for the whole year and you must file your taxes as either as a single individual or head of household if you qualify.
3. If you meet the requirements regarding dependents, you might qualify as head of household even if your divorce isn’t final by December 31, if you and your spouse stopped living together no later than May 31 of the tax year, and you paid at least 51% of the cost of maintaining your home for the year (exceptions apply, of course, this is the IRS after all).
4. If you and your spouse have been apart and living separately—you’re still married according to the tax code.
5. You must file a single return if you’re separated by a court order on December 31, and no longer just living apart on your own terms.
6. You have the option of filing a joint married return with your spouse if you’re still married, even if you no longer live together.
7. The IRS says that only one parent can claim a child on their tax return in any given year.
8. If you have two children, it’s perfectly OK for you to claim one while your spouse claims the other. You will have to negotiate in you have an odd number of offspring.
9. If you and your spouse can’t agree, the right to claim a child as a dependent goes to the parent with whom the child lived most during the year, typically the custodial parent. Additional rules apply if there is a tie for the time spent.
10. Supporting your children, either directly or with child support payments, is not tax deductible, but their medical expenses might be.
11. Your ex-spouse doesn’t have to claim child support as income. Your child doesn’t have to claim it as income, either.
12. Under the terms of the TCJA, alimony is no longer tax deductible, nor does the spouse receiving it have to claim it as income if it’s provided for in a decree that’s dated after December 31, 2018. Only taxpayers who make payments under divorce or separation agreements entered into prior to January 1, 2019, can continue to claim a deduction for payments made, and individuals who receive alimony pursuant to these agreements are supposed to continue to report the payments as income on their tax return. Be advised that for 2019 filings, in addition to requiring the individual claiming an alimony deduction to provide the Taxpayer Identification Number of the individual who received the alimony, the IRS will now also be requiring the date of the divorce agreement (Note: TCJA potentially expires at the end of 2025).
Contact Us: Decisions you make about divorce or separation today impact your taxes tomorrow. Depending on your circumstances, you might want to file a joint married return if you’re still married to be eligible for a higher standard deduction when you combine your income with that of your spouse on the same return. Check with your attorney, but also with a tax professional to be sure the decisions you are making are tax efficient when related to filing tax returns but also in the case of distribution or sale of assets! Our tax experts can be contacted toll free at 855-534-2727.
