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Divorce and the IRS: A taxing task

On Behalf of | Jan 25, 2023 | Divorce & Family Law

Divorce represents a monumental moment that presents challenges in all aspects of life. Significant changes are the rule, not the exception. Yet, the more minor details should also take precedence as a new chapter begins for once-united spouses.

During an emotionally-challenging time, the last thing you are likely thinking of is April 15th, the deadline for filing income taxes. However, as a new chapter of life begins, the “heavy lifting” of the seemingly minor issues should be attended to as soon as possible.

Important steps to take

Filing status is based on the finalization of your divorce. Dissolving the marriage by or before December 31st means a joint tax return is not an option. Formally ending the union in the new year means that the IRS will consider you married and subsequently accept a joint return.

While two spouses can file separately, filing a joint return is preferred as you can combine income and secure a higher standard deduction to lower the amount that may be due.

In 2022, the standard deduction was:

  • $25,900 for jointly filing married couples
  • $12,950 for single/married individuals filing separately
  • $19,400 for heads of households

In 2023, the standard deduction will be:

  • $27,700 for married couples filing jointly
  • $13,850 for single taxpayers and married individuals filing separately
  • $20,800 for heads of households

If you are unable to file a joint return, options exist to save money by filing as head of household. The only exception is shared custody; only one can file as head of household.

Head of household status carries specific requirements that include:

  • Paying more than half of home upkeep expenses for the year, including repairs, utilities, home insurance, real estate taxes, and even food for your household
  • Legally considered separated, divorced, or single on the last day of the year
  • Living with a qualifying dependent for more than six months of the year

Alimony and child support

Alimony finalized before January 1st is considered “above-the-line deductions” when filing taxes. Even if a divorce was filed in the previous year, verify with your tax preparer to verify the deduction of spousal support payments. Prior to the new year, alimony is considered income and subsequently reported.

Child support is significantly different in that payments cannot be deducted. Conversely, the spouse receiving those payments are not required to report them as income.

Following IRS rules to the letter, while “taxing,” can help make a new life that much easier.