Posted by Ramos Law Group, PLLC | Divorce
You are getting ready to go through the divorce process, and you already feel a range of emotions. On the one hand, you feel a sense of relief. On the other hand, you’re worried about how the divorce process will impact your finances.
Here, we’ve prepared insight on divorce and taxes: How exactly will your divorce impact your tax situation in the state of Texas?
Here’s a rundown on how your marital breakup will affect you tax-wise, and what you need to do to make sure that the tax filing process is as smooth as possible following your divorce.
What Is Your Filing Status When You Get a Divorce and Then File Taxes?
This is one of the most common divorce tax questions that people ask once their “I do” turns into “I don’t.” Once you have finalized your divorce, you can no longer file your taxes with the federal government using the “married filing jointly” and “married filing separately” statuses. Instead, you’ll have to choose “head of household” or “single” based on your situation.
If you divorce and file taxes as the head of your household, this provides major benefits versus filing as a single individual. For instance, you can take a larger standard deduction, and you’ll also be eligible for some helpful tax credits. In addition, your tax rate will be lower. However, to file as the head of your household, you must meet the following criteria:
- You must have an individual—or “qualifying person”—live with you half of the year; alternatively, this person must meet other requirements, like being absent temporarily for certain reasons. Examples of such qualifying individuals may include children who are going to school, parents who don’t necessarily reside with you but are receiving support from you, and married children whom you are claiming as dependents.
- You cover half of the cost of maintaining a household.
- You are not legally married as of the last day of the year that you’re filing your tax return for.
Note that when you are divorced and then subsequently file taxes, you and the other party cannot both choose to file as the head of the household, as you’re sharing in the responsibilities of caring for and supporting your shared children. Only if you are the parent who has primary physical custody of the children can you treat your children as qualifying individuals and enjoy the status of being the head of the household.
Also, let’s say that you and the other parent are splitting your time with the children equally. If your adjusted gross income happens to be higher, you have the right to claim the children as qualifying individuals.
How Do You Handle Child Support & Alimony When You Get a Divorce and Then File Your Taxes?
This is another one of the most frequently asked divorce tax questions in Texas. To answer this question, you’ll first need to take a look at your divorce decree. It may be written within the decree that you’ve agreed to make spousal maintenance or child support payments to your ex, or maybe you’ll be the one receiving these payments.
If you finalize your divorce in 2019 or later and then file taxes, and if you’re the one paying spousal maintenance, you can no longer deduct your spousal maintenance thanks to the United States’ most recent tax reform. However, if you’re receiving spousal maintenance, the good news is that you aren’t required to include these payments as part of the income you’re being taxed on.
When it comes to dealing with child support after you divorce and file your taxes, child support has never been treated as tax deductible for the person paying it, and the same remains true under the recent tax reform.
Claiming Dependents after You Get a Divorce and File Your Taxes
Yet another one of the most commonly posed divorce tax questions is who can claim dependents during tax filing season.
The truth is, only one part can claim the children as dependents, and as mentioned earlier, this is usually the parent who is given custody. However, if you have custody of the children you share with your ex-spouse, you have the option of giving your ex the right to claim your children as dependents instead. This is possible by completing and signing Form 8332, which the other party must file with his or her taxes.
Who claims the children as his or her dependents when you divorce and file taxes is an important question because, as mentioned earlier, you get to file as the head of your household if you claim your children as dependents. Also, you can take advantage of various tax credits as well as other deductions when your children are your dependents. These include the following:
- Child credit, worth $2,000 for each child
- Earned income credit
- Credit for dependent care and child care expenses
- American opportunity credit for any qualified education expense
Protect Your Financial Best Interests When Divorcing and Filing Your Taxes Today!
When you decide to get a divorce and file your taxes, you may understandably be overwhelmed by what to do and thus having a number of divorce tax questions. After all, filing your taxes is complicated enough without adding a divorce filing to the mix. However, the experts at the Ramos Law Group can help you to make sure that your tax filing process is a smooth one following your divorce.
Get in touch with us today to learn more about what tax filing status would be appropriate in your situation. We’ll also show you how you should handle spousal maintenance, child support, and claiming children as dependents based on your unique circumstances in the state of Texas.
Last Updated on February 7, 2023 by Ramos Law Group, PLLC