Filing Taxes After a DivorcePublished: Mar 01, 2018 in Divorce
Written by Anthony Piccirilli
When it comes time to file your taxes, whether or not you are officially divorced makes a difference. If the divorce is not yet final, then you are legally still married. You may file jointly with your spouse or separately. It may feel odd to file with your spouse when you are separated. However, if you two are on good terms, it may benefit you both. You should speak with your attorneys and financial advisors about this option.
If the final divorce decree has been handed down, then you will file as single or head of household. You need to be prepared for how to handle alimony, dependents, child support, and more. At Pittsburgh Divorce & Family Law, LLC, we can help you prepare for filing taxes after a divorce, including how the outcome of your divorce settlement impacts how much you may owe or get back.
As of early 2018, if you pay alimony, you can deduct it from your income on your federal taxes. If you receive alimony, you must include it as income. The same rules apply to your ex-spouse, depending on whether they pay or receive spousal support.
If you are currently paying support to your ex-husband or ex-wife, then talk with your divorce attorney to confirm that the payments are considered alimony. After this discussion, you should speak with a financial professional about deducting the annual amount from your taxes.
However, the rules regarding alimony will change in a few years due to the Tax Cuts and Jobs Act (TCJA). Beginning in 2019, alimony paid based on divorce agreements made prior to 2019 will continue to be income to the recipient and deductible for the payer. Spousal support based on agreements made after December 31, 2018 will not be considered income or deductible.
If you and your ex-spouse have children, there is always the big question of who claims your children as dependents on their taxes? Typically, the custodial parent claims the children on their taxes. If you have your children all or most of the time, you are the custodial parent. If your children spend less than 50 percent of their time living with you, you are the non-custodial parent.
However, this tax benefit can also be negotiated. Many parents who share custody agree to switch who claims their children on their taxes every year. This year may be your ex-spouse’s year to claim your children, and 2019 might be your year. If you do this, before sure to use the proper tax forms when the non-custodial parent is claiming a child.
In the past, claiming a child as a dependent gave you an exemption on your taxes. Under the TCJA, you obtain a Child Tax Credit, worth up to $2,000 per child under the age of 17 years old at the end of the year.
The child support you pay or receive will not impact your taxes. Child support is not considered income, which means you do not report it as income for your federal taxes. It is also not deductible. You cannot obtain a tax benefit if you pay child support to your ex-spouse.
Get Help with Your Taxes After a Divorce
If you have finalized your divorce, are going through a divorce right now, or are planning on filing for divorce, you need to consider you’re the implications this decision will have on your taxes. It might be the last thing on your mind, but it is not a factor you can ignore. A divorce significantly changes your financial situation, which in turn changes your taxes. Experienced divorce attorney Anthony Piccirilli can help you prepare for filing your taxes and guide you toward an experienced financial professional to ensure you file in the most advantageous way possible.