Divorce

Divorce and Non-custodial, Separated, or Never Married Parents

This information is intended to provide a basic understanding of the tax consequences of a divorce and some tax issues of non-custodial, separated, or never married parents.

Divorce Decree

An agreement between divorced parties.  Generally, it is not binding upon the Internal Revenue Service.

Community Property State

Special rules may apply if you live in a community property state.

See IRS Publications 504 and 555

Filing Status

In general, your filing status depends on whether you are considered unmarried or married on the last day of your tax year.  If you file jointly, each spouse is responsible for the entire tax liability, even if only one spouse had income.

Caution:  If you and your spouse file a joint return, filing another return for the same tax period, by either you or your spouse, may cause a delayed and/or reduced refund.

Amending Filing Status

If either you or your spouse files a separate return, you can change to a joint return any time within three years from the due date of the separate returns.  If you and your spouse file a joint return, you cannot file separate returns after the due date of the joint return.

See IRS Publications 501 and 504

Claiming Your Child as a Dependent

Generally, the parent who has custody of the child for the greater part of the year (the custodial parent) is allowed to claim the exemption for the child.  A special rule applies to children of divorced or separated parents.  In most cases, because of the residency test, a child of divorced or separated parents is the "qualifying child" of the custodial parent.  However, the child may be treated as a "qualifying child" of the noncustodial parent under certain circumstances.

Caution:  Claiming the same child on multiple tax returns for the same tax period may cause a delay and/or a reduced refund.

Non-custodial Parent

The custodial parent is the parent with whom the child lived with for the greater part of the year.  The other parent is the noncustodial parent.

See IRS Publications 501, 504, and Form 8332

Parent Who Never Married

The special rule for divorced or separated parents also applied to parents who never married.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a tax credit for certain people who work and have earned income below a certain amount.

See IRS Publication 596

Child Tax Credit

The Child Tax Credit is for people who have a "qualifying child".  This credit is in addition to the credit for child and dependent care expenses and the earned income credit.

See IRS Publication 972

Deductions

The same itemized deductions cannot be claimed by both parties.  For married filing separate returns, if one spouse itemizes, the other must also itemize.  Child support is not a deductible expense nor is it taxable income.

See IRS Publication 504

Alimony

Alimony is deductible by the payer and taxable income to the payee.

See IRS Publication 504

Attorney Fees

Except for a few limited circumstances, attorney fees for your divorce are not deductible.

See IRS Publication 504

Personal Residence

If you sold your main home, you may be able to exclude up to $250,000 (up to $500,00 if you and your spouse file a joint return) of gain on the sale.

See IRS Publications 504 and 523

Tax Withholding

When you become divorced or separated, you may need to file a new Form W-4, Employee's Withholding Allowance Certificate, with your employer to claim you proper withholding allowances.

See IRS Publications 504, 505, and Form W-4

Estimated Tax Payments

If you and your spouse made joint estimated tax payments but subsequently file separate returns, either of you can claim all of your payments, or you can divide them in any way on which you both agree.

See IRS Publications 504 and 505

Responsibility for Tax Due

Generally, if you file a joint return with your spouse and later obtain a divorce, you are still responsible for the tax due on the joint return or any subsequent tax, interest, and penalties due as a result of an audit or amendment of the joint return.  This applies even if your divorce decree states that your spouse is responsible for the payment of taxes.  It also applies even though you may not have had any income on that tax return.

See IRS Publication 504

Innocent Spouse Relief

In some cases, a spouse will be relieved of the tax, interest, and penalties resulting from a liability on a jointly filed return.  Generally, if you thought your spouse had paid the taxes due, or the IRS increased your taxes because of your spouse's unreported income or disallowed deductions and you knew nothing about your spouse's unreported or erroneous items when you signed the return, tax relief may be available to you.

See IRS Publications 504, 971, and Form 8857

Injured Spouse Relief

If you file a joint return and all or part of your share of the overpayment is applied against your spouse's past-due federal tax, state income tax, child or spousal support, or federal nontax debt, such as a student loan, you may be entitled to injured spouse relief.

See IRS Publication 504 and Form 8379

Refund Checks

Refund checks issued from a joint account are usually mailed to the address shown on the tax return or deposited in the account specified.  The IRS will not issue two checks payable to each spouse separately.

Address Change

If you change your mailing address, be sure to notify IRS using Form 8822, Change of Address.

See IRS Form 8822

Name Change

If you change your name, be sure to notify the Social Security Administration office so the name on your tax return is the same as the one the SSA has on its records.

Tax Records

Determine a mutually acceptable location for tax records and a procedure for accessing them.  You may need these records in the future to prepare tax returns, assist in future tax planning, or for support in the event of an audit.

See IRS Publication 552