The time of year when taxes are due could cause greater stress some years than others. If you and your partner have recently divorced or split, you are definitely dealing with a whole bunch of issues that you haven't had to deal with in the past, and you probably also have a few questions. The following are some tax guidelines that should be kept in mind.
When the Internal Revenue Service Confirms That You Are Divorced
In the eyes of the Internal Revenue Service (IRS), you are legally considered to be married if your divorce has not yet been finalized as of the last day of the tax year (December 31), regardless of whether you or your spouse filed for divorce during that year or not. You are also unable to file a marital return since the court will regard you to be unmarried for the entirety of the year if the divorce judgment was issued on December 31 of that year. According to the tax code, you are still considered married unless a court ruling specifically declares that you are divorced or legally separated from your spouse. If you are legally ordered to live apart on December 31, then you are no longer married, even if you are living apart on your own terms prior to that date. In Publication 504 of the Internal Revenue Service (IRS), the distinction between divorced and separated taxpayers, as well as the numerous additional laws that apply to them, are explained in further detail. According to the regulations of the IRS, you are also considered to be unmarried for the entire year if you have a decree that annuls your marriage.When Your Divorce Is Already Underway, Filing Jointly for Divorce
If you and your spouse are still legally married but do not live together, you have the option of filing a joint tax return with your spouse, even if you do not already do so. When you file a joint tax return with your spouse and combine your incomes, you are entitled to a larger standard deduction than when you file separate returns. This might be advantageous. If you file a separate return as a married couple in 2021, your standard deduction will be $12,550. This amount will carry over to the tax return that you will submit in 2022. This is equivalent to the standard deduction for individuals who are filing taxes alone. In the tax year 2021, a married couple that files their taxes jointly can deduct a total of $25,100 using the conventional method. If both you and your spouse bring in roughly the same amount of money each month, this practically cancels itself out. If you divide the $25,550 standard deduction that you are eligible for between the two of you, that comes out to $12,550 for each of you, which is the same amount that you could claim if you filed separate tax returns. However, if you earn substantially more than your spouse or perhaps they do not work at all, you may be able to deduct a significant amount of that $25,550 from your taxable income.Responsibility Shared by All Parties
However, there is a potential downside to filing jointly if your marriage is on the verge of dissolution. When you file a joint tax return with your spouse, you both become jointly and severally liable for all of the taxes that are payable, even on income that either one of you earned on their own. Therefore, the Internal Revenue Service is able to collect the taxes that are owed from you if, for instance, you earned $20,000 and your husband made $80,000 (but didn't pay taxes on that amount). You may be held responsible for wrongdoings as well, such as if your spouse is dishonest about their income or illegally claims credit or deduction. In this scenario, you may be held liable.Declaring Yourself as the Head of Household If You Are Apart From Each Other
If the Internal Revenue Service believes you are still married but you do not yet have a final court order, you are not required to file a joint return with your spouse or a separate return with your spouse, even if the IRS believes you are still married. On the other hand, you are required to file a single return even if you are legally divorced. It's possible that you could file your taxes under a different status: head of household. You will be able to take advantage of a larger standard deduction when you file your taxes as a head of household, which will be $18,800 in the year 2021, and you will also be able to make more money before being subject to a higher tax bracket. Even if your divorce isn't final by December 31, you still could be able to qualify as head of household if the Internal Revenue Service declares that you're "considered unmarried." That, according to the regulations of the IRS, entails that: You and your spouse did not continue to live together during the final half of the tax year because you made the decision to do so. You have contributed more than fifty percent of the total amount required to cover the cost of keeping your home for the year. You are also required to fulfill the following additional prerequisites: You must have a dependency. Typically, this would be your child, but other members of your family could also be eligible. Your dependant must have lived with you for more than half of the year in order to qualify as your dependent; however, certain relatives, such as your parents, are exempt from this requirement if you pay for more than half of their living expenses in a location other than your own. If you want to claim the head-of-household filing status, you will need to file your taxes independently from your spouse.Who Gets to Stake Their Claim on the Children?
According to the Internal Revenue Service (IRS), only one of a kid's parents can claim the child as a dependent on their tax return during any given year. It is not only permissible but also relatively frequent for one parent to claim one of their children following a divorce or separation while the other parent claims the other child in a situation involving two children. However, if you only have one child or if you have an odd number of children, you and your spouse won't be able to claim any of them on your taxes at the same time within the same tax year. If you and your spouse are unable to come to an agreement over who will claim the children for tax purposes, the Internal Revenue Service has specific tiebreaker procedures. The parent with whom the child resided the majority of the last year, who is often the custodial parent, has the legal right to claim the child as their own. In the highly improbable scenario in which the child spends exactly the same amount of time with each parent, the Internal Revenue Service (IRS) goes on to the second rule in the tiebreaker series. The parent who has the larger adjusted gross income is the one who gets the deduction for the dependents (AGI). Your child must have lived with you for more than half of the year in order to qualify as your dependent. This requirement is in addition to the standards for breaking ties. Your child must be under the age of 19 or under the age of 24 if they are attending school full-time, and you must provide more than half of their financial support. When it was signed into law in December 2017, the Tax Cuts and Jobs Act (TCJA) did away with personal exemptions for your spouse and all of your dependents. This change did not take effect until January 1, 2018. This tax advantage is no longer accessible, at least not until the TCJA's likely expiration at the conclusion of the 2025 tax year.Is it possible to deduct alimony and child support payments?
The amount of child support that you might pay cannot, however, be deducted from your taxes in any way. The Internal Revenue Service takes the position that you would not have been able to claim a tax deduction for the money you spent on your children's food, clothing, and shelter if you and your ex-spouse had remained married and your family had therefore remained whole. This is because the IRS believes that you would have been unable to maintain a family unit. These are considered personal expenses, and even after the divorce, they will continue to be regarded as personal expenses. Because the child support you pay is for the benefit of your children, your ex does not need to claim it as income either. Since it is for the benefit of your children. Nor do your children. The transfer of funds for child support is not subject to any taxes. If you get alimony and it is stipulated in a decree or agreement that was issued on or after January 1, 2019, alimony payments will no longer be tax deductible. In the past, the Internal Revenue Service considered alimony to be a form of income that could be spent in any way your ex-spouse saw proper. When you earned it, it was considered taxable income for you; nevertheless, it turned out that you weren't able to put that money to any use. Because of this, you have the ability to claim an above-the-line deduction for the amount that you paid on the very first page of your tax return. On their tax return, your spouse would be required to report the amount as income and pay taxes related to that income. Because of the Tax Cuts and Jobs Act, things are different now that 2019 has here. It is no longer necessary for the spouse who receives alimony to report it as income, and alimony payments are no longer tax deductible. However, this regulation is only applicable to alimony payments that were stipulated in a divorce decree or agreement that was issued on or after January 1, 2019. Alimony payments that were awarded or agreed to in divorce orders issued in 2018 or before are still eligible for a tax deduction.Are There Any Costs That You Can Deduct Due to Your Divorce?
Unfortunately, there is no longer any way for you to deduct any costs that are linked with your divorce, at least not while the TCJA is still in place. Neither the expenditures involved with getting a divorce nor the majority of the costs associated with going to court could ever be deducted. On the other hand, you are allowed to deduct any fees that you spent that were directly related to the production of income. For example, if you had to hire a lawyer to secure an alimony order, you might deduct those fees. The Tax Cuts and Jobs Act (TCJA) did away with itemized deductions for miscellaneous expenses like this one under the tax code. It is likely that Congress may renew the TCJA at the end of 2025, but if that does not occur, several of these tax incentives could be reinstated. In the interim, you might want to give some thought to arranging your divorce or separation in such a way that there will be no personal exemptions, miscellaneous deductions, or tax breaks for paying alimony.Questions That Are Typically Asked (FAQs)
After a divorce, who is responsible for paying back taxes?
Even after a divorce, regardless of the terms of the divorce agreement, both former partners are still jointly and severally liable for any tax debt that accrued during the years that they were married and filed their taxes jointly as a married couple. On the other hand, there are a few situations in which one spouse or former spouse might be able to lessen or even get out of their liability altogether. The Internal Revenue Service provides detailed guidelines for qualifying for certain exemptions.After a divorce, who is responsible for paying the property taxes?
Your legal obligation to pay property tax is determined by the local tax rules that apply in your area. In most cases, the person who was listed as the owner of the property when the property tax return was filed is the one who is responsible for paying the tax. If both spouses were listed as owners of the property at the time it was reported, and they had not yet divorced, then both of them will typically be responsible for paying the tax on the property.If I got divorced in the middle of the year, how should I submit my taxes?
The Internal Revenue Service will treat you as divorced for the purposes of calculating your taxes for that year if you get a divorce at any point during the year. That means you can no longer report your marital status on tax forms. You will only be allowed to file your taxes in one of three ways: either as a single person, a qualifying head of household, or a qualifying widower.