We are not tax attorneys and do not give definitive tax advice, but we can refer you to qualified tax professionals.
Divorcing couples should consider these effects on their taxes:
Filing status and exemptions Dependent exemptions Spousal support Retirement benefits
Filing status and exemptions
A divorced or divorcing couple’s filing status is determined as of the last day of a tax year, usually December 31.
For tax purposes, a couple is no longer married when a judge signs a final divorce decree or separate maintenance judgment.
If you have had custody of a child for more than six months and are not remarried by the end of the calendar year, you may qualify for Head-of-Household status.
Dependent exemptions
Parents often split the exemptions when there are multiple children.
Parents of one child often alternate the exemption.
Child support is paid in after-tax dollars. There is no deduction for it.
Spousal support
Spousal support is treated as income to the receiving spouse, and a tax deduction for the paying spouse.
Spousal support can be an effective tool for reducing taxes.
Retirement benefits
Retirement plans/benefits can be divided in a divorce. For employer-provided plans, a Qualified Domestic Relations Order (QDRO) assigns a portion of the benefits of a qualified retirement plan to a spouse.
IRA plans usually do not require QRDOs to be divided.
When the receiving spouse withdraws the money, that spouse will be taxed on the amount withdrawn.
A divorced or divorcing couple’s filing status is determined as of the last day of a tax year, usually December 31.