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5 Things to Know About How Divorce Affects Your Tax Return

Blogs from March, 2020

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Going through the divorce process is stressful, especially when you think about all the things that are going to change. One issue you’ll have to now deal with is your tax return. Save yourself a headache by learning about the tax consequences of divorce.

The Effect of Divorce on Your Filing Status

Getting a divorce will have the most significant impact on your filing status. Depending on when your divorce is finalized will determine your filing status.

If your divorce is not yet final as of December 31, you will still be considered married for filing status purposes. However, if the court finalized your divorce on December 31, you will be considered unmarried for the year. If you are unmarried, you will need to file as single or head of household if you qualify.

Filing as Single vs. Head of Household

Your filing status impacts how much you can claim on your deductions. If you are filing as head of household, you can claim a larger deduction. In order to be eligible for this filing status, you must meet the following qualifications:

  • Be considered unmarried by the IRS

  • You paid at least 51% of the cost of maintaining your home for the year

  • You must have a dependent

  • You must have the right to claim your dependent on your tax return even if you do not actually do so

  • You must file a separate tax return from your spouse

Who Claims the Children?

If you are filing as head of household, you must have a dependent, which can be your child. According to the IRS, only one parent can claim a child on their tax return. If you have only one child, you and your spouse will have to decide who is going to claim your child. If you have two children, you can claim one while they claim the other.

Child Support Payments

When you support your child after a divorce, either directly or through child support payments, you are making a personal expense. This means child support is not tax-deductible.

Also, if you are the one receiving support, you do not have to claim it as income, and neither does your child. In no case is child support considered income. When you calculate your gross income during tax season, you don’t have to include the payments you received either.

Alimony is Not Deductible

Prior to 2019, alimony was tax-deductible. However, under new terms by the Tax Cuts and Jobs Act (TCJA), alimony is no longer a tax deduction, and the spouse receiving it does not have to claim it as income as long as the divorce was finalized after December 31, 2018.

If you have questions about the divorce process, contact the Pasadena divorce lawyers at Law Offices of Christopher L. Hoglin, P.C. today at (626) 653-4075.

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