Tips for Divorced Taxpayers

Divorce brings all sorts of changes – you might live in a new home, a new city, or even have to make new friends. While you may have a newfound sense of independence, divorce brings more practical considerations, such as handling your taxes. How does your tax filing change after a divorce? How can you ensure you’re complying with the IRS? These tips will help you navigate your first tax season after a divorce.

To make for the easiest tax situation, make sure to:

  1. Change Your Name
    If you took your spouse’s last name, you must notify the Social Security Administration when you change it back. If you fail to do so, you might run into complications during tax season. Your social security number must match your last name – which will be the one that you last filed with the SSA. Fortunately, informing the SSA of your name change is simple. Go to your local social security office, fill out a form, and bring a recently issued document that serves as proof of your name change (driver’s license, divorce decree, etc.). If your children’s names also changed as the result of the marriage or divorce, you’ll have to change their names, too. Failure to change their names back could cause confusion and delay your ability to claim deductions and credits for children or other dependents.
  2. Know When to Change Your Filing Status
    Getting married affects your filing status and so does divorce. To file as a single taxpayer, your divorce must be finalized as of December 31st of the prior year. For example, if you wanted to file your 2017 taxes as a single taxpayer, your divorce must be finalized by December 31, 2017. If your divorce is finalized January 1, 2018, you will still need to file a tax return as a married couple. It’s important to file appropriately, as this could have a large effect on the amount of taxes for which you are responsible. If you must file as a married couple even after your divorce is finalized, talk to a CPA about the benefits of filing jointly or separately.
  3. Deduct Spousal or Child Support, Where Applicable
    If you’re either paying or receiving spousal or child support, it’s important to know how to claim it on your tax return. Generally, those receiving child support claim it as income on their returns, but the federal government does not consider it taxable. If you’re paying child support, however, you may be able to deduct spousal support payments from your tax burden (this does not apply to child support). Your divorce decree will provide further specifics on this issue. Sometimes, a divorce settlement involves negotiations that make spousal support payments both non-taxable and non-deductible. Talk to your family law attorney for more information about your divorce decree.
  4. Adjust Your Withholdings on Your W-4
    When you started your job, you filled out a W-4 form that designated a number of allowances and the amount of withholding from each paycheck. Your amount of withholding changes when you get married, and the same rule applies when you divorce. Ask your employer for a new W-4 form, and adjust your withholdings to avoid owing taxes in the next tax year.

Getting divorced is stressful enough, and taxes should not make the process worse. With a proactive approach, you can avoid tax burdens and make your first year filing a divorce as seamless as possible. Follow these tax tips to avoid owing money or running into complications with the IRS next tax season. For further guidance on taxation and divorce, speak to a CPA or family law attorney