Five Things You Need to Know About Filing Your Taxes After a Divorce

Tax season !!!  (Anyone hear the Jaws theme suddenly start playing in the background?)

If you are either in the process of getting divorced or got divorced last year, then you may be facing a totally different tax situation than you are used to. Take care! You don’t want to accidentally lose out on some big new deductions you weren’t aware of or claim your children when your husband also claims them.

Here are five important things you need to know before you file your taxes to avoid some major tax pitfalls…and unpleasant correspondence with the IRS.

1. Know Your Tax Filing Status

The very first thing you need to know before you start filing your taxes this year is your filing status. Your tax bracket, available deductions, and overall tax bill will be hugely affected by whether you file jointly with your spouse or file separately. If you and your spouse are officially divorced by December 31st of the prior year then you will have to file separate taxes. (If you are the custodial parent of at least one dependent child, you can file as a head of household and receive a much larger standard deduction and lower tax rates.) However, if you are separated or still in the divorce process at the end of the prior year, then you have the option of either filing a joint tax return or listing your status as “Married Filing Separately.” Your accountant can help you determine which option is best for your situation. (Learn more about tax filing status during divorce.)

2. Who Will Claim the Kids?

With the passage of the tax overhaul at the end of 2017, you can now claim a $2,000 credit for each dependent child in your household. Additionally, if you are paying for your children to go to college, you  may be able to enjoy a tax credit of up to $2,500 for the American Opportunity Tax Credit or up to a $2,000 credit under the Lifetime Learning higher education tax credit.

If you are the custodial parent you have the automatic right to claim the children on your tax return unless you waive that right. If you share custody of your children with your ex, then things can get a little trickier. Typically, the parent who spent more time with the children in the prior year has the right to claim them; however, you can also negotiate with your ex-spouse to determine who will claim the children. Either you or your spouse can sign a waiver saying you will not claim the children this year.

3. Are You Paying Alimony/Spousal Support?

The way alimony is taxed recently changed under the 2017 tax overhaul. For all divorce agreements signed after December 31st, 2018, the spouse paying alimony (also known as spousal support or spousal maintenance) will not get a deduction, while the spouse receiving spousal support will not pay taxes on that income.

This is a reversal of the previous rules. The new rule is not retroactive, meaning if you were divorced before December 31st, 2018, then the spouse receiving spousal support will have to declare and pay taxes on that income and the spouse paying will receive a deduction. So, if you divorce before the end of 2018 and are paying spousal support to your ex-husband, you will make it under the cut. You can deduct those payments, and he’ll be the one paying taxes on them.

(Find out if you will have to pay alimony to your ex-husband.) You cannot, however, deduct child support payments, so don’t try to get away with deducting more than is legal.

If you divorced before the end of 2018 and are receiving spousal support from your husband, you must report the amount as income on your tax return and pay taxes on it. This is very important to understand, because it means that if you spend all of your alimony payments, you could be surprised by a tax bill. (Find out if you are eligible for alimony.) You can either put a percentage of each spousal support check into a savings account to cover your tax bill or ask your employer to withhold a little more from your paychecks to cover your alimony income. Child support is not considered income and does not have to be reported on your taxes.

4. Be Prepared for Property Taxes If You Kept the Home

If you kept the home, then not only will you have to shoulder the monthly mortgage payments on your own, but you’ll also have to cover the full amount of property taxes as well. However, you will not have to pay taxes on the property transfer. Just be aware that if your home has increased dramatically in value since you and your ex-spouse originally bought it, you may face high capital gains taxes if you decide to sell the home at a later time! (Capital gains taxes will only apply if your home has appreciated in value by more than $250,000 since you originally bought it).


5. Know All Your Deductions

You may be surprised to find out just how many additional deductions you can take as a result of your divorce. For example, if you paid a financial consultant to help you understand your tax situation before you divorced, you can deduct that cost. You can also deduct any medical costs you pay on behalf of your children even if you are not the custodial parent, as well as work-related expenses that result from caring for any children under the age of 13.

It’s worth pointing out that the standard deduction for singles nearly doubled to $12,000 in 2018 as part of the Trump tax overhaul. It may make more financial sense to simply take the standard deduction, but it’s worth at least trying to itemize to see which option saves you the most money.

After your first year of divorce, it is always a good idea to seek the advice and services of a Certified Public Accountant so that you don’t miss any deductions or make expensive mistakes. If you are still considering divorce and want to learn more about what your financial life might look like after you make the leap, we invite you to sign up for the next Second Saturday Divorce Workshop in your area and to keep reading our divorce article archives.

12 thoughts on “Five Things You Need to Know About Filing Your Taxes After a Divorce”

  1. If money is borrowed against a rental property to fund the property settlement, is the interest tax deductible? The property settlement includes the rental property and a personal residence.

  2. I am very recently divorced and finalized the process without any legal counsel of my own. That leaves a major question I am struggling to find an answer for…
    How can I protect myself (post divorce) from being forced to pay the upward of $20K in income taxes we owe? (It is with great strength that I hold back the rant about how this happened!) The debt is for income taxes from both our jobs and was incurred during years years that we filed jointly because we were still married.

    The divorce decree only states that all marital debts are to be split 50/50. There is nothing specifically stated about federal and state income tax debt and my ex has a consistent history of sticking someone (anyone!) with his debts and seems not to lose a moment of sleep over it.

    The divorce left me with nothing but a few pieces of furniture and a vehicle that makes my high school car look impressive. Emotionally, I am left a pile of mush, only able to venture out of my tiny apartment to do odd jobs. Meanwhile, he earns 6 figures a year.

    Any advice you can share about how I could possibly split the tax debt in half so as not to be legally held responsible for him not paying his portion of what’s owed would be much appreciated. Note: I have no reason to believe he’ll follow the divorce decree because he blatantly violated the judges orders from the two temporary hearings prior to the bench trial.

    1. If you filed a joint tax return, you agreed to be “jointly and severally” liable for taxes, which means the taxing authorities can go after either one of you for payment. If you have nothing, it is likely that they will go after your former spouse, attaching his bank account, etc. But if they do go after you and collect from you, you can go after your former spouse for reimbursement of his share of the taxes you paid.

      1. What a relief to hear that, Ginita! I will, quite literally, sleep better knowing this!
        Please accept my gratitude and the gratitude of everyone you help by making this resource available!
        II only wish I had known this site existed BEFORE I filed. After learning so much by reading your articles and especially the individual questions you seem to tediously answer in the comments’ section of the articles, there are many things I would have done differently before and during my divorce. Rest assured, though, there’s not a woman in my life, married, divorced, single or “it’s complicated” that won’t know about your online gift to the world now that I’ve found it! Thank you!

  3. I would like to know which are my tax implications with my retirements benefits. When my husband be retired in one or two years more, I will receive a portion of my husband retirements benefits (between 1, 300 or 1,600 dollars monthly), and also he has a Supplemental Account in Annuities now, that after the QDRO I will have a portion of that money. We are in the point to sign our MSA and I will be Legally Separated soon. What kind of implications I will face with my taxes in the future with these money and my new Status?
    Do I have talk with an Certified Account to know about this situation? I am not originally from this country, and my knowledge about taxes is almost nothing, specially because my husband always had the complete control of our finances. I am so worried because my husband is calm and calculated person, and he will try to take advantage of my ignorance.
    Please, I need urgently advise and guide, if not I will be completely in his hands again.

  4. I have been divorced for several years. Was married for almost 40 years. Since I have remarried. My former husband worked for the state and doesn’t get SS. I only get 300 a month for retirement. Can I get SS from my divorced husband? I have been told different things so can you help?Thanks

    1. Since you are married, generally you cannot collect social security benefits on your former spouse’s earnings history. You can contact the Social Security Administration to see if there’s anything special that applies to your situation.

  5. Augustina Wingate

    I am in the process of a divorce and what to share with you another option that I learn from my CPA.
    We have no been divorce yet, so as of 2016 when filing taxes this year for the year endin in 2016 my option
    Filing married but separately simple form or itemize. Well guess what? You both have to agree to file the same way. You and you husband have to file the same way meaning if he itemizes you have to itemize. If he files married filing separately using the simply form you have to file the same way.
    I am getting spousal support and working but I don’t have a lot of deductions so of course I have to pay taxes for the spousal support and higher taxes. He on the other hand is still working as a periodontist,has a farm and has many deductions. He said he is itemizing which I knew of course he would
    So I asked my accountant how much more will I have to pay because I have to itemize. He figured out the difference will be around $900. So I negotiated with him to pay the difference. Which he did. But when his attorney found out he wrote my attorney and told her he would claim this amount next year as additional spousal support. I agreed.- Mistake?! But I thought it would be cheaper than having the attorneys fight it out.

  6. If your ex bought you a car in April of 2014 and you didn’t get divorced into early 2016 can he claim that as alimony?

    1. If you and he had a written agreement that as part of alimony he would buy you a car, and he did so, then that constitutes alimony that is taxable to you and deductible by him. If that isn’t what happened, then it isn’t.

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