The Implications of Divorce on Income Tax

A woman working with a tax form and a calculator.

Reporting the Necessary Changes

After going through a divorce, your financial situation is going to look different, and these differences will vary from a changed income to different expenses. One area you should expect to change significantly is your income tax situation. From how you file to how much money you withhold, here are key changes you may face in your tax liability you should remember going into divorce.

Filing Status and Tax Bracket

If you and your spouse’s divorce was finalized on or before December 31st, then you can no longer file your taxes with “married filing jointly” as your status. Both you and your spouse will have to switch your filing status over to “single.” While that seems like a simple change, you should be aware that changes to your filing status also have implications on your tax bracket and, therefore, how much in income tax you pay.

Typically, married couples have higher tax brackets than single individuals (by comparing tax brackets, you will note that the top income range for each tax percentage for a single filer is half the amount for a married couple filing jointly). When your divorce is finalized and you file as “single” once more, you may find that your income pushes you into a different tax bracket. Be sure to consult with your certified tax professional to confirm your status as well as advise you on how to proceed.

Spousal Support and Child Support

If you are ordered to make payments such as spousal support or child support, you should be aware of their implications on your income tax, as well. Child support payments are not considered in a person’s income if they are receiving the payments, so those do not need to be reported as such. If, however, you are responsible for paying child support, those payments cannot be deducted from your taxable income.

Spousal support and its role in taxes have changed, and how it affects your taxes depends on the date of your divorce. The IRS states that if a couple’s date of divorce is before January 1, 2019, then alimony payments can be deducted from the payor’s gross income (however, consult with your local tax professional to confirm that this is still the case for your situation, as any modification made to a divorce prior to this date could change how your payments are impacted). If your divorce was finalized on a date later than this, then your spousal support payments to your former partner cannot be deducted from your income.

Ask Questions of the Professionals

If you have questions about divorce in California and how your finances may be impacted, be sure to consult with a family law attorney who can guide you in the right direction.

The above information was shared for informational purposes only and is not intended to be tax advice. If you have questions specific to your income taxes, including the information above, please seek the help of a licensed tax professional.

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