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You are here: Home / Blog / Tax Issues After Divorce

Tax Issues After Divorce

September 4, 2019 By Patty Havard

Many people wonder how they should file their tax return after divorce and what will change on it. 

Here’s a list of things to consider and plan for:

2 different issues to determine for tax purposes: 

  • Filing Status – HOH or Single (determined on last day of calendar year — 12/31)
  • Dependency exemption for each child

“Custodial” and “noncustodial” parent — definitions are different for IRS than for “custody” per the divorce decree: 

  • The “custodial” parent is the one whom the child resides with for more than ½ of the year – and this can change from year to year
    • To qualify for HOH status – you must have at least 1 person who lives with you for more than ½ of the year (whether or not you deduct them as a dependent)
  • If the child lives with each parent equally – per the tiebreaker rules – then the parent with the highest AGI is the “custodial” parent – and this can change from year to year

Dependent Exemption:

  • IRS doesn’t usually get involved as to which parent claims the child as a “dependent” – just as long as the same child is not claimed by both parents
  • If the “custodial” parent agrees to give (or revoke) the dependency exemption to/from the “noncustodial” parent – he/she must execute Form 8332 and both should attach it to their tax return (for each applicable year)

Tax Credits for children:

  • Child Tax Credit (currently up to $2,000 per child under 17) – goes with the parent claiming the dependency exemption
  • Child Care Expenses/Credit (form 2441) – (for children under 13 — or older & disabled) – stays with “custodial” parent
  • Earned Income Tax Credit (EITC) – goes with the parent claiming the dependency exemption

Things to do Post-Divorce:

  • Complete a new form W-4 with your employer to make sure you are having enough tax withheld
    • The IRS has 2 “tools” on their website to help with this – “Tax Withholding Estimator” and “Paycheck Checkup”
  • Review your Beneficiaries on all bank & investment accounts, retirement accounts, insurance policies, etc.
  • If your name changed (example: you restored your maiden name) – make sure to contact Social Security and apply for a new SS card (Form SS-5)

These tax issues can be very confusing – and you should always consult with a qualified Tax Professional & your Divorce Attorney regarding the above items.  But whatever you do – don’t call the police on your Ex-spouse for a “tax emergency” – like this woman did – because they won’t be able to help you! 

Want to Read more?

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Tax Issues After Divorce

September 4, 2019 By Patty Havard

Tax issues and Divorce

Many people wonder how they should file their tax return after divorce and what will change on it.  Here’s a list of things to consider and plan for: 2 different issues to determine for … [Read More...]

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