How your taxes change after a divorce

There are several tax benefits to filing a joint return as a married couple. When you get divorced, those benefits may go away, and you may pay higher taxes.

Zack SigelDerek Silva

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Zack Sigel

Zack Sigel

Managing Editor

Zack Sigel is a managing editor at Policygenius who oversees our mortgages, taxes, loans, banking, and investing verticals.

&

Derek Silva

Derek Silva

Personal Finance Expert

Derek is a personal finance editor at Policygenius in New York City, and an expert in taxes. He has been writing about estate planning, investing, and other personal finance topics since 2017. He especially loves using data to tell a story. His work has been covered by Yahoo Finance, MSN, Business Insider, and CNBC.

Updated June 23, 2021|9 min read

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Filing taxes during and after a divorce can be complicated. Some of the biggest changes you’ll experience involve using a different tax filing status — perhaps leaving you with a higher tax bill — and the potential gain or loss of eligibility for tax credits and deductions. You’ll also inevitably have questions about how to handle certain types of expenses or income, like alimony and child support. Below we cover all these topics and share the information you need to successfully navigate your taxes after a divorce.

Key Takeaways

  • Your income tax rate may go up after a divorce, depending on your income level

  • There are certain tax breaks that some newly single parents can claim, like the child tax credit

  • The parent with whom a child lives for more of the year is the custodial parent, and they can often claim the child as a dependent

  • You cannot deduct alimony payments, child support payments, or any legal fees after the Tax Cuts and Jobs Act of 2017

How filing taxes changes after divorce

The U.S. tax code often treats married taxpayers and unmarried taxpayers very differently, so you will almost certainly see some changes after getting a divorce. Below are two ways filing your taxes could change after divorce:

  • Your filing status will change

  • Your tax rates may change

Choosing a filing status after divorce

Tax payers who aren’t married have two possible tax filing statuses you can use: single or head of household. A single filer is an unmarried tax filer who doesn’t pay the majority of the cost to care for a dependent. A head of household is a single filer who pays most (at least 51%) of the cost to care for a dependent.

If you will care for children after your divorce, check to see if you qualify for the head of household filing status because you will receive preferential tax treatment, especially at lower income levels; a head of household is more likely to pay lower tax rates than a single filer and they may more easily qualify for certain tax deductions or tax credits.

New tax brackets and tax rates after divorce

When your filing status changes from married filing jointly to single (or to head of household), the income limits for your federal tax brackets will change and you may end up paying a different tax rate.

The income limits for each tax bracket is higher for joint filers than for other filing statuses, so if you earned more than your spouse when filing joint returns, you may pay higher tax rates after your divorce. More of your income will fall into the income bracket for a higher tax rate. If you earned less than your spouse, your individual income may keep you in the same bracket or even drop you into a lower tax bracket. The income brackets also differ based on whether you file as single or head of household.

As an example, if you earned $100,000 and your ex-spouse earned $50,000, your combined income would have a marginal tax rate of 22% when you file a joint return. But if your filing status changes to single, then your $100,000 has a marginal tax rate of 24%. Your ex-spouse’s $50,000 of income would keep them in the 22% bracket.

You can check your new income tax brackets in our breakdown of the 2021 income tax brackets.

Tax credits you can claim after divorce

Depending on your income and the specifics of your divorce, you may qualify for certain tax credits after your divorce. However, it is also possible that you will not longer qualify for the all the tax credits you claimed as a married couple. Whether you or your ex-spouse can claim any of these credits is largely based on who has custody of your children. If you don’t have custody, it is possible for the custodial parent to allow the noncustodial parent to claim these credits by signing a written declaration, as long as the other qualifications for living situation and support are met.

Here are four tax credit available to tax filers with a dependent:

Also make sure to check our list of 53 tax credits and deductions you can claim in 2021, including tax breaks for people without children and specifically for the COVID-19 pandemic.

The child tax credit

The child tax credit is available for single filers and head of household filers who have income of up to $200,000. For 2021 the CTC is worth up to $3,600 per young child and you can qualify to receive up to half of your total credit through monthly payments instead of as one lump sum when you file your tax return early next year. Learn more about the 2021 child tax credit.

The credit for other dependents

The credit for other dependents is worth up to $500 and applies to anyone who qualifies as your legal dependent but doesn’t qualify you for the CTC. As an example, caring for a parent may qualify you for the ODC but not the CTC.

Child and dependent care credit

Parents who need to pay for child care while they look for work may be able to receive a credit refunding those care expenses.

Earned income tax credit

Taxpayers with dependents can qualify for the EITC (sometimes called the EIC) if their income is below certain limits. The EITC is primarily for lower-income filers and those with multiple dependents can receive higher credits.

Can I claim my child as a dependent after divorce?

You can generally claim your child as a dependent if you are their custodial parent — meaning that the child lived with you for a longer time during the year — and if the child otherwise meets the criteria to qualify as your dependent. (If your child lives with you and their other parent for an equal amount of the year, the parent with the higher adjusted gross income, AGI, is the custodial parent.)

If you aren’t the child’s custodial parent, you most likely cannot claim them as your dependent unless their custodial parent signs IRS Form 8332 (or a document with the same information) allowing you to claim the child as a dependent instead of them.

Learn more: Who qualifies as my dependent?

Can I deduct child support on my taxes?

Unfortunately, you cannot deduct any child support payments you make. Child support payments also aren’t taxable income for the recipient. Also note that if you pay child support, you can only claim children as dependents if they live with you for at least half the year or if the person with whom they do spend most of their time signs Form 8332. [1]

Need help filing taxes on your own? Start with our guide to filing income taxes.

Can I deduct alimony payments on my taxes?

Probably not. If your divorce or legal separation were executed on or after January 1, 2019, you cannot deduct any alimony payments, and payments you receive do not count as taxable income. (If you make payments to your ex-spouse even though you aren’t legally require to do so, it may be subject to the gift tax.)

If your divorce or legal separation documents were finalized on or before December 31, 2018, you can deduct any alimony payments you make and the recipient must include the alimony payments in their taxable income. [2] Use Schedule 1 to deduct alimony payments when you file your taxes. This deduction is available whether you claim the standard deduction or itemize deductions.

The removal of alimony payments as a deduction was passed as part of the Tax Cuts and Jobs Act of 2017. Learn more about who saw the greatest benefits from the 2017 tax cuts.

Can I deduct legals fees from my divorce?

No, you can’t deduct legal fees or court fees you incurred from a divorce. You also can’t deduct the cost of any counseling or advice you received during the divorce process. Legal fees you pay to arrive at a financial settlement or property settlement also aren’t deductible (though they may affect your property’s cost basis).

However, if you’re filing taxes for 2017 or earlier, filers who itemize deductions may be able to claim a miscellaneous itemized deduction (using Form 1040 Schedule A) for legal fees incurred while attempting to get their ex-spouse to make spousal support payments, like alimony. This deduction was eliminated by the Tax Cuts and Jobs Act of 2017.

My divorce isn’t finalized yet. How do I file taxes?

For the purpose of deciding your filing status, the IRS considers you unmarried only if have one of the following by December 31:

  • A final decree of divorce

  • A decree of separate management, for couples who want to be separated but aren’t ready to divorce

  • An annulment

If you do not have any of those three things as of December 31, you have two options when filing your taxes:

  • File a joint return still

  • File separate returns using the married filing separately status

For spouses who are still on good terms, filing jointly may be the easiest solution and it could save both of you money on your taxes. For spouses who aren’t on good terms or simply do not want to file jointly, you can file separate returns. If you have lived apart for at least six months of the year and you are your children’s primary caregiver, you may also be able to use the head of household filing status. Start with our guide to filing jointly vs. filing separately, which includes cases where you should look to use the head of household status instead of simply filing separate returns.

3 other tax moves to make during a divorce

After going through a divorce or legal separation, make sure to update your W-4. (Here's our guide to Form W-4.) A W-4 form tells your employer how much tax to withhold from your paychecks. If you don’t update your W-4 after a divorce, your employer will likely continue to withhold money based on your old joint income level, leaving you underpaying tax or paying too much (and having smaller paychecks).

Note that only full-time employers require a W-4. If you have an employer that requires you to submit Form W-9 instead (or if they send you a 1099 form at the end of the year) then they will not withhold taxes and you may need to pay estimated taxes.

Another important thing to do during the divorce process is to track your spending and keep receipts so you know which spouse is paying certain expenses. For example, if you’re married and receive the advance premium tax credit (APTC), you will need to track who is spending money on premiums and how your income changed during the divorce. Filers who itemize deductions may face similar challenges. Help yourself by keeping a record of your spending. (This will also help in the case of an IRS audit.)

If you have any concerns about what your spouse will claim on their taxes after your divorce, you may want to file your taxes before your ex-spouse. Filing first can help prevent an ex-spouse from falsely claiming a child as a dependent, claiming certain expenses as their own, or from attempting to still file a joint return with you (maybe to try and claim your refund as their own). If your spouse makes a mistake such as this, whether intentional or not, you may be eligible for innocent spouse relief, but working with the IRS to correct your returns could be a major hassle.