10 Things You Need to Know About Divorce and Taxes

Tax Tips

Divorce is difficult enough. What could add to the anxiety that divorce brings? Taxes. If you are one of the many people who recently divorced, this year, as a result you will be coping with new tax issues, and may even be filing your own tax return for the first time. Here are ten tips to help you handle tax issues now that you are divorced.

1. Determine your filing status. Your marital status at the end of the year determines how you file your tax return. If you were divorced by midnight on December 31 of the tax year, you will file separately from your former spouse. If you are the custodial parent for your children, you may qualify for the favorable head of household status. If not, then you will file as a single taxpayer, even if you were married for part of the tax year.

2. Consider the tax implications of support. Child support is not deductible to the person who pays it, but alimony is. Likewise, the recipient of alimony must claim it on her tax return, but child support isn’t reported as income. If you rolled your support together into “family support” in your agreement, that makes it fully taxable to the recipient and deductible to the payer, just like alimony.

3. Don’t run afoul of the special rules regarding support. If alimony payments are concentrated in the first year or two after divorce, the IRS may consider the money to be non-deductible property settlement. And if alimony is scheduled to end within six months of a child’s 18th or 21st birthday, the IRS may consider the alimony, in reality, to be disguised child support.

4. Review your divorce decree to see who will claim the children as exemptions. If divorce agreement did not specify who claims the children as exemptions, then the exemption for your kids goes to the custodial parent. If you have joint custody, the exemption goes to the parent who has the child the greatest number of days during the tax year.

5. Get signed Form 8332 if required. If you are entitled to claim the tax exemption for children who spend less than six months of the year living with you, then you will need your ex-spouse to sign IRS Form 8332 (Release of Claim to Exemption for Child of Divorced or Separated Parents). A copy of this form must be filed with your income tax return for you to claim the tax exemptions for children not living with you.

6. File first if exemptions are an issue. If you are entitled to claim the children on your return, but your ex threatens to claim them instead, file early in the year. That way, since you’ve already claimed the children, the IRS will make your ex prove he or she was entitled to the exemption.

7. Claim the child care credit if you are eligible. If you are the custodial parent and you incur work-related child care for children under the age of 13, you may be able to claim a credit for a portion of the cost. Unlike the exemption, which can be assigned using IRS Form 8332, the child care credit is available only to the custodial parent.

8. Review legal fees paid during your divorce. Although most legal fees are not tax-deductible, fees you paid for advice concerning the tax consequences of your divorce can be taken as an itemized deduction on Schedule A of your tax return, as can fees incurred to obtain alimony. Other fees, such as the cost of preparing a new title for your rental property, can be added to the tax basis of your assets.

9. If you are employed, change your withholding on Form W-4. You can claim one additional exemption for every $3,600 or so of deductions, including alimony payments. If you are receiving alimony, consider asking to have extra tax withheld from your paycheck to cover your new tax liability.

10. Make estimated tax payments if withholding isn’t enough. If your withholding won’t be enough to cover your taxes for the coming year, set up quarterly estimated tax payments so that you won’t owe taxes and penalties at the end of the coming year.

Divorce may not be as inevitable as taxes, but it certainly brings complications to tax filing. Follow these ten tips, and the process should go smoothly in the future. Once your divorce questions are answered, TurboTax can handle your tax return.

Comments (90) Leave your comment

  1. as of sept 30, 2014 my divorce was granted. I am the non-custodial parent and work full time. i was granted to claim 2 out of 4 children on my taxes with an opportunity for a buy- out clause. He (the custodial parent) has not worked at all in 2014 so can he claim anything? How does the buy out clause work?

  2. If I was still married to my spouse, and was separated from her in February of 2013, and the electric bill was still in my name where we lived at, and I lived somewhere else, then, how am I suppose to be able to prove that we were separated, if I had no other utility bills in my name, and everything I had sent to me was going to a p.o.box, instead of an address.

  3. I suspected my ex had off shore accounts.Nothing showed up on his tax records,but this was 2009,how could I know if he claimed them later due to the stricter rules regarding taxes and these types of accounts

  4. He asked me for the divorce then moved out took almost the entire house.I want to ask for support.He bought me a car and it breaks down all the time . He has not served me with papers ,The house was mine but I had to give it up I could not pay the bills I only got ss . Living with family .Do I need a attorney ?

  5. My husband name is not on my house we live in and he move out will he be entitle to get a part of my house. I all ready was told if his name not on the mortgage he can’t get anything just asking to make sure thank you

  6. Divorce final 10/2012 we owned an investment property together that has a mortgage I was given the investment in the divorce and my husband was given the marital property we owned. My question is can I claim the rental income, mortgage interest and loss for the property or do I need to split it with my ex-husband. The same on the marital property do we split the mortgage interest or do we just claim properties we were awarded and any write offs for those properties? My ex has been telling me he will file the 2012 tax returns in both our names jointly and has not done it yet and I’m concerned what the reprecussions might be since it is 2014. I filed mine individually for 2013

  7. me and my ex has been divorsed for about 4 yrs and she is remarried. we have joint custody but she has primary. and i pay childsupport and am on dissability. well for the past 6 mths the kids has been stayiing with me cause she and him having problems. but i still pay cs wich she gets and nothing for me to help me while the kdis are here. should i report her to cs services.

  8. i have a question please help me i am never on here so if you can or anyone that knows email me your answer back i would be so greatful please…i am divorce live in chicago IL we have a child together and my question is do we have to give each other a copy of our tax return for proof of income for child support? meaning exchange it?? please help me i need to know the answer on that. thank yuo

  9. I just filed for divorce from my husband. When pulling IRS income forms i found out that he has not filed our income tax since 2010. He files Married, Joint returns. I had no income in 2011 or 2012. I have Social Security income for 2013. Can I file married, single for these years just to clear my name or does this need to be settled during the divorce.
    I want to purchase a home after the divorce and taxes not filed may hamper this process.

  10. If I receive a cash payout of my husbands 403.b retirement funds are they taxable on my end? If so what is the tax rate?

  11. My wife of 16 years decided that she no longer wanted to be married June 2013. Since we lived in a home that her Grandmother purchased for her estate with our 2 minor children she forced me to leave the house. In July or 2013 I moved into a rented apartment. Because I work for the school district I am off during the summer months and my wife had recently gotten a job after being unemployed for 3 years. I took care of the children all summer during the day and sometimes during the nights also. At one point my wife moved our 12 yr old daughter things out on the sidewalk for me to pick up along with my daughter and she lived with me for the next 2 months. No legal papers have been filed as of this date April 2014. My wife has file 2013 income tax as head of household claiming the children and will not provide any of our past tax paperwork for me to use in filing my 2013 taxes. I continue to provide childcare during school vacations and every other weekend. Since she has already filed for 2013 what can I do as far as my filing of taxing also she will not provide me with the childrens ss numbers. Help please she says she already has received the refund and has spent it..

  12. I was divorce by the end of the year. How do i file if both are names are onthe title for the house still and I didn’t live there during the year.

    1. Hi Cheryl,
      If your divorce was final at the end of the year you have to file as single for 2013. If you both pay for your house and are on the title you can split the deduction for the home mortgage interest and property taxes. TurboTax will ask you questions related to your home and make the calculations for you.
      Thank you,
      Lisa Greene-Lewis

      1. Lisa –

        Got divorced this year and am planning for taxes next year. In the settlement, I agreed to alimony on a monthly basis. She is now asking if I can pay it as a lump sump each year for the yearly allocation. Am I allowed to pay ahead of schedule (but only up to the yearly amount) and not have it disallowed by the IRS? Or will I run into issues? Thanks!

      2. Hi,
        It won’t matter for your taxes whether it is paid as a lump sum for the year or monthly. You will still be able to deduct the amount paid for alimony for the year on your taxes.

        Thank you,
        Lisa Greene-Lewis

  13. My x and I divorced a few years ago I have been filing my taxes as a NY state resident, I have been living in Canada for 6 months I don’t work there since I don’t have a work permit. I don’t have any idea how do I file my taxes this year. I’m in the US for a few weeks and I will go back to Canada. What should I do?

  14. Divorced in 2013. I have custody of one child, no child support being paid. I am going to file Head of Household. Problem is ex has the tax records from 2012 and won’t give me a copy of them. I don’t remember if we received a state refund. He does not work so he won’t be filing a tax return for 2013. How can I find out what my liability is for the state refund if there was one? His address was on the state tax form so the 1099G would have gone to him.

  15. I am receiving retirement.In the divorce i agreed to my ex getting half the retirement.She filed QDRO but they only gave her 20%. I have been giving her the half we agreed upon in the divorce decree. Do i add the difference i have been paying her to the alimony i am paying her on my taxes.

  16. Divorced last year. I have just received a bank 1099 form from a closed custodian account. It has our son name and with his social number on it. Since the statement was sent to me, I would like to file it. Can I file it as part of my other 1099 forms together even it has his name on it? Note that I am going to claim him as my dependent because he lived with me more than 6 months last year. Please help

  17. My divorce became final on Nov 1st, 2013, my ex-wife and I have no children but we did own a home which we sold. We are just beginning to receive the tax documents for interested paid etc, how does that get divided since we have to file separate?

  18. My divorced was final in April 2013. My name is on the parent plus loan for my 22 year old daughter. My ex pays 42% of the loan and I pay 58%. Can we both claim the loan on our taxes since we both have a part in repaying?

  19. My husband has been incarcerated o and of for years. We filed for divorce several years ago but never followed up on it. However, I filed my taxes once or twice as Single/Divorced. I never knew that I could get a tax break if I filed a joint return. We were married in 2001 and I’ve only filed taxes twice since then. (I didn’t make enough to have to file) What kind of trouble would I get into if we were to file jointly this year. Will I be in trouble for claiming I was single last year?

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