How Will Your Taxes Change After a Divorce?One of the biggest changes will be in your filing status. Most married couples file their tax returns as “married filing jointly,” which gives them a greater tax deduction than filing separately. For the tax year of the divorce, you have the opinion of filing jointly with your spouse. However, beginning with the next tax year after your divorce is final, you will likely file your tax returns as “single” or “head of household.” The change in filing status could have an impact on the amount of taxes you owe each year.
Claiming your minor children as dependents is another tax change after divorce. Only one parent can claim the children as dependents on a tax return. If parents cannot agree who should claim the child or the court order does not address the issue, the IRS rule is that the parent with whom the child resided for most of the year can claim the child on his or her tax return. In most cases, the court order will address the matter. For the parent who loses the deduction, his or her tax liability could increase substantially depending on other factors.
Child support is not tax-deductible. Therefore, even if you are paying a substantial amount in child support, you will not be able to deduct it from your taxable income. Your spouse will not be required to report child support as income on his or her tax return. Alimony was a different matter.
Alimony before the Tax Cuts and Jobs Act was a deduction for the payer and income for the payee. Under the new tax laws, alimony is treated in the same manner as child support — the paying spouse does not receive a tax deduction for alimony payments, and the receiving spouse does not pay taxes on alimony payments. The new rule does not apply to written agreements or court orders entered before January 1, 2019.