The information in this article is up to date for tax year 2024 (returns filed in 2025).
When you’re going through a divorce, taxes may be the last thing on your mind. Filing separate tax returns after a divorce is mandatory, regardless of how long you were married within the tax year. But divorce can have a significant impact on your taxes—including your filing status, name changes, qualifying credits and deductions, and social security benefits—and your overall financial future.
If you’re filing taxes after divorce this year, keep the following tips and considerations in mind.
Updating Your Form W-4
Because your financial and tax situation changes dramatically after divorce, it’s important to update your tax withholdings. Failing to adjust your tax withholding might leave you with an unexpectedly large tax liability at the end of the year.
The IRS requires individuals to submit a new W-4 to their employer within 10 days following divorce or separation.
Determining Your Filing Status
Your filing statuses are based on your marital status on December 31 of the tax year. If your divorce is finalized by then, you cannot file a joint return. However, if your divorce is not finalized until the new year, the IRS will recognize you as married for tax purposes. You will then have to decide if you want to file jointly or separately.
Married Filing Jointly vs. Married Filing Separately
Filing jointly can result in a bigger tax break for you both, as you can get a bigger standard deduction from your combined incomes.
The standard deduction for tax year 2024 is $29,200 for married couples filing jointly, $14,600 for single taxpayers and married individuals filing separately, and $21,900 for heads of households.
However, filing jointly also means each spouse is responsible for the tax payments (and any penalties). So, if one spouse earns significantly more than the other, that could put a greater burden and financial risk on the lower-earning spouse. In such cases, it may be better to choose “married, filing separately.” This means each spouse files their own returns and is responsible for the associated taxes individually.
Head of Household
When filing taxes after divorce, you may be able to file as head of household. Head of household status provides a better tax break than filing as single.
To file as head of household, you must meet the following criteria:
- A qualifying dependent lived with you in your home for at least 6 months of the year.
- You were divorced (and therefore considered “unmarried”) by December 31.
- You paid for more than half of the home’s maintenance costs for at least half the year. (This can include repairs, utilities, home insurance, etc.)
Keep in mind that if you are sharing custody with your spouse, only one of you can file as head of household. Easy tax filing is just a few clicks away with ezTaxReturn—no expertise required.
Sorting Who Can Claim Dependents
A dependent can only be claimed by one person. So if you have children, you’ll need to determine who can or will claim them as dependents after the divorce. This will impact both your filing status as well as the specific tax credits, such as child tax credits, you qualify for.
Typically, the custodial parent (i.e., the parent the child lives with for the majority of the year) is entitled to claim the child(ren) as a dependent. The custodial parent will then potentially qualify for several associated tax credits, such as the Child Tax Credit.
Pro Tip: The non-custodial parent may be able to claim a child as a dependent (and get qualifying tax credits) if the custodial parent signs permission through IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. The custodial parent will then no longer be allowed to claim the child as a dependent or receive associated tax credits.
Claiming Tax Credits
There are multiple tax credits available to parents and guardians with dependents. To qualify as a dependent for the 2024 tax year, your dependent generally must:
- Be under age 17 at the end of the year
- Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
- Provide no more than half of their own financial support during the year
- Have lived with you for more than half the year
- Be a U.S. citizen, U.S. national or U.S. resident alien
Child Tax Credit
The Child Tax Credit is worth up to $2,000 per qualifying dependent if your modified adjusted gross income is $200,000 or below (or $400,000 if you’re married filing jointly).
If you qualify for the Child Tax Credit, you may also qualify for these tax credits:
- Child and Dependent Care Credit
- Earned Income Tax Credit
- Adoption Credit and Adoption Assistance Programs
- Education credits
Because there are so many valuable tax benefits available for taxpayers with dependents, this is a big consideration when filing taxes after divorce. Don’t miss out on tax credits and deductions—start filing with ezTaxReturn!
Child Support and Alimony Payments
Before 2018, both child support and alimony payments used to be tax deductible for the payee and considered taxable income for the recipient. A well-drafted divorce agreement can significantly influence tax deductions for alimony and the allocation of child dependency claims. (If your divorce was finalized prior to 2018, that may still apply to your alimony payments).
However, following legislation in 2017, child support payments are no longer tax deductible by the payer or taxable for the recipient for any divorce settled after December 31, 2018.
According to the Social Security Administration (SSA), if you are divorced, your ex-spouse can receive benefits based on your record (even if you have remarried) if:
- Your marriage lasted 10 years or longer.
- Your ex-spouse is unmarried.
- Your ex-spouse is age 62 or older.
- The benefit that your ex-spouse is entitled to receive based on their own work is less than the benefit they would receive based on your work.
- You are entitled to Social Security retirement or disability benefits.
This also applies in reverse—you may be entitled to collect divorced spouse social security benefits under the same conditions. Your ex-spouse does not have to be collecting their benefits yet for you to claim divorced spouse benefits, as long as the divorce is at least two years old. Any benefits you receive will not affect the social security benefits paid to your ex.
Pro Tip: Social security benefits may be taxable, so keep this in mind when you file taxes after divorce.
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Divorce Settlement and Taxes
A divorce settlement can have significant tax implications for both parties involved. It’s essential to consider the tax consequences of the settlement to ensure that both parties are aware of their tax liabilities and benefits. Here are some key points to consider:
- Taxable income: Any income received as part of the divorce settlement, such as alimony or child support, is considered taxable income. This means you will need to report it on your tax return, which could affect your overall tax liability.
- Tax deductions: Certain expenses related to the divorce, such as attorney fees, may be deductible on your tax return. It’s important to keep detailed records of these expenses to maximize your potential deductions.
- Property division: The division of property, such as real estate or investments, can have tax implications. For example, if one party receives a larger share of the property, they may be responsible for paying capital gains tax on the sale of that property. Understanding these implications can help you make more informed decisions during the settlement process.
- Retirement accounts: The division of retirement accounts, such as 401(k) or IRA accounts, can also have tax implications. It’s essential to consider the tax consequences of transferring these accounts as part of the divorce settlement. Proper planning can help minimize any potential tax liabilities.
Retirement Assets and IRAs
Retirement assets, such as 401(k) or IRA accounts, are often a significant part of a couple’s assets. When dividing these assets as part of a divorce settlement, it’s essential to consider the tax implications. Here are some key points to consider:
- Tax-deferred growth: Retirement accounts, such as 401(k) or IRA accounts, offer tax-deferred growth, meaning that the funds in the account grow tax-free until withdrawal. This can be a significant advantage, but it also means that taxes will be due when the funds are eventually withdrawn.
- Tax implications of withdrawal: When withdrawing funds from a retirement account, the funds are subject to income tax. It’s essential to consider the tax implications of withdrawing funds as part of the divorce settlement. Early withdrawals may also incur additional penalties, so it’s important to plan carefully.
- QDRO: A Qualified Domestic Relations Order (QDRO) is a court order that allows for the transfer of retirement assets from one spouse to another as part of a divorce settlement. A QDRO can help minimize tax implications and ensure that the transfer is done correctly. It’s crucial to work with a knowledgeable attorney to draft a QDRO that meets all legal requirements and protects your financial interests.
By understanding the tax implications of your divorce settlement and retirement assets, you can make more informed decisions and potentially reduce your overall tax liability.
Filing taxes after a divorce doesn’t have to be complicated. With ezTaxReturn, you can file quickly and easily, and we guarantee you’ll get your biggest possible refund. Start today!
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
