Whether you’ve recently been married, legally separated, or divorced, if your marital status has changed in the past year, you’ll need to think about the tax implications. To better understand the potential tax implications of a change in marital status, we consulted H&R Block®. Keep reading to learn some of the ways your recent change could affect your taxes.
What’s Your Status?
According to the Internal Revenue Service (IRS), there are five filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying widower with dependent child. Your marital status will play a large part in determining your filing status. If you’re unsure of your filing status, check out IRS Publication 501: Exemptions, Standard Deduction, and Filing Status.
Regardless of your marital status, your name on your tax return must match what the Social Security Administration has on file. Name changes, even those resulting from marriage or divorce, must be reported to the IRS. Otherwise, delays in processing tax refunds could result.
Something to Remember. Keep in mind that, at this point, federal tax-filing rules are different for same-sex spouses. According to the IRS website, “Same-sex partners may not file using a married filing separately or jointly filing status because federal law does not treat same-sex partners as married for federal tax purposes.” This also goes for registered domestic partners, since they are not spouses as defined by federal law. However, same-sex couples in community property states must report their income and expenses under the community property rules. See Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States, for more information.
Filing Status. If you’ve recently been married, chances are you’ve had the money talk with your new spouse. But even if you decide not to combine your finances, you’ll no longer be able to file your federal tax returns as “single.” Generally, married taxpayers file a joint return because of the added tax benefits, including eligibility for certain credits and deductions. However, filing separately can sometimes lower your overall tax bill. You may consider consulting a tax professional to learn which filing status is most advantageous to your individual situation.
Getting Legally Separated or Divorced
Filing Status. Marital status as of December 31 of the year tax returns are being filed is one important factor in determining your filing status. This means that, even if you’re divorced today, if you weren’t divorced or legally separated on December 31 of the filing year, you and your former spouse must continue to use one of the filing statuses for married couples: married filing jointly or married filing separately. In some instances, you or your spouse may qualify to file as head of household if you are not married, or considered unmarried for tax purposes as of December 31. To file as head of household, you must meet several requirements. To learn about head of household status eligibility, read the H&R Block Tax Tip on Divorce or check out IRS Publication 501: Exemptions, Standard Deduction, and Filing Status.
Marital status as of December 31 of the year tax returns are being filed is one important factor in determining your filing status.
- Alimony—also known as spousal maintenance or spousal support—is deductible by the payer. According to H&R Block, alimony is an above the line deduction, which means that if you pay alimony, you don’t have to itemize to deduct it. But if you receive alimony, you must claim the amount you receive as taxable income, which means you might need to make estimated tax payments or increase your withholding on income you earn from your job. To learn more about alimony and how it impacts your tax return, visit H&R Block Tax Tip on Divorce or check out IRS Publication 504: Divorced or Separated Individuals.
Child Support. Unlike alimony, according to the IRS, child support isn’t tax-deductible for the payer, and it is not considered income for the recipient. As a result, child support should not be reported on your income tax return, regardless of whether you make or receive child support payments.
Child Dependent Status. According to H&R Block, if you have legal custody of your child, you can claim him or her as a dependent. As the custodial parent, you may also be able to release to the noncustodial parent your right to claim your child as a dependent for tax benefits. Read more about child dependency status in H&R Block Tax Tip on Divorce or learn the IRS rules for claiming your child as a dependent in IRS Publication 501: Exemptions, Standard Deduction, and Filing Information.
Child Tax Credit. If you claim your child as a dependent, you may also be eligible to claim the child tax credit. You can learn more about child tax credit eligibility in the H&R Block Tax Tip on Child Tax Credit or in IRS Publication 972: Child Tax Credit.
Remember that every situation is unique. If your marital status has changed in the recent past and want to learn more about the tax implications, consult the IRS website. You can also learn more on the H&R Block’s website.
For more advice on navigating the finances of getting divorced, visit Women & Co., Citi’s personal finance resource for women.