It is almost a universal truth that as your marital status changes, so will your tax obligations. In deciding to divorce, it is important to know that if your divorce is finalized by December 31 of the year in which you file taxes, the Internal Revenue Service will consider you unmarried for the entire year and you will not be able to file a joint return.
This article reviews some of the other important details that you should remember when filing taxes for the first time after a divorce.
Select an Appropriate Filing Status
If you are no longer married, it is important to remember that you will no longer be able to file taxes as “married filing jointly” or “married filing separate.” Instead, you will be required to file as either “head of household” or “single.” To qualify as head of household, a person must meet several requirements, which include the following:
- You are not considered married on December 31 of the year for which you are filing taxes
- You have a “qualifying individual” who has either lived with you for at least half the year or who meet other factors including being absent for an allotted time
- You pay at least half the cost of maintaining a home during the year in which you are filing taxes
Because head of household status cannot be filed by both former spouses after a divorce, it is common for disputes to arise about who is allowed to file for head of household status.
Deciding Who Will Claim the Children as Dependents
Only one former spouse will be able to claim the couple’s children as a dependents following a divorce. In many cases, the parent who receives the deduction is the custodial parent. By signing a Form 8332, however, the custodial parent is able to transfer this duty to a non-custodial parent. It is still advantageous for a custodial parent to claim a child as a dependent to both receive head of household status as well as to become eligible for certain tax credits and deductions.
Properly Report Alimony and Child Support
It is common for spouses to agree to pay alimony or a spouse might be required to pay child support. Whatever financial transaction is involved, this can have a substantial impact on a person’s taxes. If you divorced by December 31, 2018 and pay alimony, you can deduct the alimony that you paid in 2018. After this date, however, a person cannot deduct any alimony that he or she pays. If you received alimony, however, you will not need to include these payments in your taxable income.
Speak with an Experienced Attorney
If you or a loved one has questions or concerns about taxes or any other aspect of the divorce process, you should not hesitate to speak with an experienced attorney. Contact Vayman & Teitelbaum P.C. today to schedule a free initial consultation.