Getting a divorce is a stressful and complicated situation. Taxes are one of the complications. I will review a few of the common tax considerations when you are legally divorced or your divorce is pending.
IRS Filing Status
You are considered unmarried for the whole year if on December 31 you obtained a final decree of divorce or separate maintenance. When you are legally divorced your filing status is Single or Head of Household. You are able to claim Head of Household if your son or daughter lived with you for more than half of the year. There are additional tax benefits for filing Head of Household compared to filing Single.
You are considered married if you have not obtained a final decree of divorce or separate maintenance. Your filing status is limited to Married Filing Joint, Married Filing Separate, or Head of Household. You are able to claim Head of Household if your son or daughter lived with you for more than half of the year and your ex-spouse hasn’t lived with you for more than 6 months. Filing Head of Household has numerous additional tax benefits compared to filing Married Filing Separate.
The custodial parent is the first thing to determine when there are children involved. You are considered the custodial parent when the children live with you for more than 50% of the year. As the custodial parent, you are allowed to claim the children as dependents on your tax return.
Both you and your ex-spouse may agree on who can claim the children in the divorce decree. However, if you are the noncustodial parent, you must obtain a signed IRS Form 8332 from the custodial parent to claim the children as dependents on your tax return. IRS Form 8332 is required even if the divorce decree states that you are allowed to claim the children as a dependent on your tax return.
Alimony and Child Support
Alimony you pay to your ex-spouse is deductible on your tax return. Alimony you receive from your ex-spouse is taxable income. Alimony must be paid under a divorce or separation instrument to report alimony on your tax return.
There are no tax considerations when child support is paid. Child support is neither taxable income nor a tax deduction on the tax return.
For more detailed information on the tax implications of getting divorce, I highly recommend reading IRS Publication 504, Divorced or Separated Individuals.