Tax time can bring more headaches in some years than in others. If you've recently separated from your spouse or gotten divorced, you’re facing a whole lot of issues you haven’t had to deal with before, and you probably have several questions, too. Here are a few tax rules to keep in mind.
When the IRS Recognizes Your Divorce
You’re technically still married under IRS rules if your divorce isn’t yet final as of December 31 of the tax year, even if you or your spouse filed for divorce during that year. Likewise, you’re considered unmarried for the whole year if the court issued your divorce decree on December 31, so you can’t file a married return.
You’re still married, according to the tax code, unless a court order states that you're divorced or legally separated. You’re no longer married if you’re separated by court order on December 31, not just living apart on your own terms.
You’re also unmarried for the whole year under IRS rules if you have a decree of annulment.
Filing Jointly When Your Divorce Is in Progress
You have the option of filing a joint married return with your spouse if you're still legally married, even if you no longer live together. This can be beneficial, because it makes you eligible for a higher standard deduction when you combine your incomes on the same return.
Your standard deduction is $12,400 in 2020, the tax return you filed in 2021, if you file a separate married return. This is the same as the standard deduction for single filers. The standard deduction for those who are married and filing jointly is $24,800 in tax year 2020.
The standard deduction for those who are married and filing jointly is $24,800 in tax year 2020. The standard deduction for married couples filing jointly for the 2019 tax year is $24,400.
This works out as nearly a wash if you and your spouse earn comparable incomes. That's $12,400 for each of you, the same as you could claim by filing a separate return, if you divide that $24,800 standard deduction by the two of you. But if you earn a lot more than your spouse—or maybe they don’t work at all—that $24,800 can subtract significantly from your taxable income.
Joint and Several Liability
There’s a downside to filing together if your marriage is on the brink, however. You become jointly and severally liable for all taxes due when you file a joint return with your spouse, even on income that they personally earned. So, for example, if you earned $20,000, and your spouse earned $80,000 (but didn't pay taxes on that amount), the IRS can collect the taxes due from you. You can be on the hook for misdeeds as well, such as if your spouse is less than honest about their income or fraudulently claims a credit or deduction.
Filing as Head of Household if You’re Separated
You’re not necessarily limited to filing a joint married or separate married return if the IRS says you’re still married, because you don’t have a final court order yet, nor must you absolutely file a single return if you’re technically divorced. You might qualify for another filing status: head of household.
Filing as head of household allows you to claim a larger standard deduction—$18,650 in tax year 2020—and you can earn more income before climbing into a higher tax bracket as well.
You might qualify as head of household, even if your divorce isn’t final by December 31, if the IRS says you’re “considered unmarried.” According to IRS rules, that means:
- You and your spouse stopped living together before the last six months of the tax year.
- You paid more than 50% of the cost of maintaining your home for the year.
You must also meet a few other requirements:
- You must have a dependent. This would typically be your child, but other relatives can qualify, too. Your dependent must have lived with you for more than half of the year, but some relatives, such as your parents, don't have to live with you if you pay for more than half of their living expenses elsewhere.
- You must file a separate tax return from your spouse to claim head-of-household filing status.
Who Gets to Claim the Kids?
The IRS says that only one parent can claim a particular child on their tax return in any given year. If you have two children, it’s perfectly OK for you to claim one while your spouse claims the other—in fact, this is somewhat common after a separation or divorce. But if you have only one child, or you have an odd number of children, you and your spouse can’t simultaneously claim any of them in the same tax year.
The IRS has special tiebreaker rules if you and your spouse can't agree on who will claim the children. The right to claim a child goes to the parent with whom the child lived more during the year, typically the custodial parent.
The IRS moves on to the second tiebreaker rule in the unlikely event that the child somehow spent an exactly equal amount of time with each parent. The dependent deduction goes to the parent with the higher adjusted gross income (AGI).
In addition to the tiebreaker rules, your child must have lived with you for more than half the year to qualify as your dependent. You must provide more than half of your child's support, and they must be under age 19, or age 24 if they’re a full-time student.
The Tax Cuts and Jobs Act (TCJA) eliminated personal exemptions for your spouse and each of your dependents from the tax code when it went into effect in January 2018. This tax break is no longer available, at least not until the TCJA potentially expires at the end of 2025.
Can You Deduct Child Support and Alimony?
Unfortunately, you can't claim a tax deduction for child support you might pay. The IRS takes the position that if you and your ex had remained married, and if your family had thus remained intact, you could not have claimed a tax deduction for money you spent feeding, clothing, and sheltering your children. These are personal expenses, and they’re still considered personal expenses after you divorce.
The child support you pay is for the benefit of your kids, so your ex doesn’t have to claim it as income, either. Nor do your children. Child support is a tax-neutral exchange of money.
Alimony is no longer deductible, either. The IRS used to consider alimony to be income that your ex could spend as they saw fit. It was taxable income to you when you earned it, but as it turns out, you didn't have the use of that money. You therefore got to take an above-the-line deduction on the first page of your tax return for the amount you paid. Your spouse would have to claim it as income on their return and pay taxes on it.
The situation changed in 2019 under the terms of the TCJA. Alimony is no longer tax deductible, nor does the spouse receiving it have to claim it as income if it's provided for in a decree that's dated after December 31, 2018.
Can You Deduct the Costs of Your Divorce?
Unfortunately, you can no longer deduct any expenses associated with your divorce, at least not while the TCJA is in effect.
You could never deduct fees associated with getting a divorce, nor could you deduct most court costs. But you could deduct fees you paid that were associated with generating income, such as if you had to pay a lawyer to get an alimony order. This was a miscellaneous itemized deduction, and the TCJA eliminated those from the tax code.
It's possible that Congress will renew the TCJA at the end of 2025, but many of these tax breaks could come back if that doesn't happen. In the meantime, consider planning your divorce or separation around no miscellaneous deductions, no personal exemptions, or no tax break for paying alimony.