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How to file taxes if you are going through a divorce? [April 2023]

Divorce creates disruption and confusion throughout many facets of life, including taxes. Navigating how to file taxes when you are going through a divorce can be confusing. Whether you filed jointly or separately before getting divorced, understanding what works best for your individual situation—including considerations such as alimony and child support—is key when preparing your tax returns. From knowing the laws to choosing the most beneficial filing status, there is critical information that can help you make the best filing decisions.

Be Sure to File Under the Correct Name

If you’ve recently changed your name as part of a new marriage or divorce, it’s important to understand that this may lead to a delay in receiving your tax refund. The Internal Revenue Service (IRS) requires that the name on your tax return match your record at the Social Security Administration (SSA) in order to process your refund. Therefore, if your name has not been legally changed before filing your taxes, it’s advisable to use your married (in the case of divorce) or maiden name (in the case of marriage).

Once your name change is official, you can then file your taxes under your new name. However, it’s important to notify the SSA of the name change beforehand, as this will ensure that their records are updated. Furthermore, notifying the SSA of any changes ensures that your future benefits, such as Social Security and Medicare, will be processed under your new name.

It’s worth noting that changing your name on your tax return is not the same as changing your name legally. In fact, changing your name on official documents, such as a marriage certificate, divorce decree or court order, are the only ways to legally change your name.

Select Your Filing Status

Couples sometime assume that the moment their spouse moves out of the marital home or a divorce case is filed, they are no longer considered married for tax purposes. However, the Internal Revenue Service (IRS) takes a more stringent view, and in most cases, they will continue to consider you and your spouse as legally married until a final divorce decree is available. This means that unless a decree has been issued before the end of the tax year for which your return is due, you must file your taxes as a married individual, even if your spouse does not live with you anymore or a divorce case is pending in court. Without a final divorce decree in hand, you cannot file as unmarried or head of household.

You typically have two filing status options during divorce or separation proceedings; you can file as a married person jointly with your spouse, or you can choose the status of married but filing separately. In some instances, you may not have a choice but to file a separate tax return because communication with your spouse has completely broken down. Other times, you may suspect that your spouse is underreporting their income to the IRS in a bid to evade taxes.

It is important to note that filing as married jointly entitles you to a deduction that is not available to those who file separately. Additionally, if you file separately, you may not be able to take advantage of certain tax credits and deductions.


Decide Who Claims the Children

When considering filing taxes separately from your spouse, it is important to determine who will be claiming your children as dependents. Many times, the court will issue an order as to who claims the child(ren). However, if the court does not issue an order, confusion may arise. It is crucial to discuss and agree on who will claim the child or children before filing your tax returns.

It is important to note that claiming a child as a dependent on more than one tax return can result in penalties from the IRS. Therefore, it is essential to communicate with your spouse and come to an agreement ahead of time to avoid any confusion or legal consequences. By being proactive and discussing these matters in advance, you can ensure a smooth and successful tax filing process.

How to Handle Child Support and Maintenance/Alimony

If you are undergoing a divorce, it is important to understand the nuances of alimony and child support payments in relation to taxes. While you may have made payments to support your spouse before the divorce was finalized, these payments do not qualify as alimony according to the IRS, unless they are court-ordered and specified as such.

Child support payments are not tax-deductible for the paying parent, nor are they taxable income to the receiving parent. For divorce agreements entered into after 2018, maintenance payments are no longer tax-deductible for the person making the payments, nor are they taxable for the person receiving them. This change in tax law should be taken into consideration when negotiating your divorce settlement, as it will impact the financial outcome for both parties involved.

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