Your first tax period after a divorce can be confusing. You cannot reference your previous tax return statement since your filing status (and likely your combined income level) has changed. A divorce will change your filing status depending on when the courts finalized the dissolution of marriage. You cannot file like a single person since you will have to consider property division, child, and/or spousal support payments for taxation. Learn how to make taxpaying at easy as possible after a divorce with these tips. Work with a professional tax preparer if in doubt.
Figure Out Your Name Change
If your name changed after your recent divorce, you must make sure the name on your tax return matches the one you registered with the Social Security Administration. Listing a different last name will lead to issues processing your return since the SSA will not be able to match your tax return with your records. Notify the SSA of your name change before you file your taxes. This will prevent any name-related complications. To do this, file Form SS-5 with your local SSA office for a new Social Security card with the last name you desire.
Know Your Filing Status
The Internal Revenue Service (IRS) imposes a cut-off date for when you must file separate tax returns after a divorce. If your divorce became official as of December 31st of the year prior to when you’re filing, you must file separate tax returns. For example, your divorce must have been official by December 31st, 2017 to file 2017’s taxes no later than April 2018. “Separate tax returns” means filing as “single,” not as, “married filing separately.” Look at the date of your divorce to understand your filing status for the current tax year. Filing under the wrong status could dramatically affect your tax payment amount.
Adjust Your Income Amount
Since your filing status will change after a divorce, the amount of income tax the IRS will withhold from your paycheck will also change. You will have to fill out a new Form W-4 with your employer, listing yourself as single or without your spouse as a dependent. This will change how much the IRS will take from your income each month. Visit your employer’s payroll department and request this form after your divorce is final. Update the number of tax allowance you’re claiming to avoid issues with your return.
Claim or Deduct Child/Spousal Support Payments
If your divorce agreement includes child and/or spousal support payments, learn how these might affect your taxes. If you’re the spouse making these payments to your ex, you can deduct alimony payments but not child support from your income. Before you make this deduction, check with your divorce decree. In some cases, spouses agree to make spousal support payments non-deductible. If you’re the one accepting these payments, you must claim it as property or income on your tax return. Again, this goes for spousal support payments but not child support. The IRS will tax the spousal support amounts you receive for the given tax year. Taxes are complex enough without adding a recent divorce. Speak to a professional tax preparer during your first year as a divorcee to make sure you do everything by the books.