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What Do I Need to Know About Filing Taxes After My Divorce?

Many Texas divorce cases focus on how to divide a couple’s property. But there is often less attention paid to questions like what happens to each spouse’s filing status when it comes to paying federal income tax. It is often beneficial to file your taxes as either a married person or as a head of household. So how do you determine your status if you are in the middle of a divorce?

Who Is the “Head of Household”?

Although divorce is governed by state law, the Internal Revenue Service (IRS) has its own regulations that determine a person’s filing status for purposes of federal income tax. The basic rule to keep in mind is that your filing status usually depends on your marital status on the final day of the tax year.

For most of us, the tax year ends on December 31. So if you are married on December 31, 2023, then you can still file your 2023 tax return under the status of “married”. This applies even if you and your spouse are separated or living apart. As far as the IRS is concerned, you are still married unless and until a state court issues a final decree of divorce or approves an order for legal separation. (Texas does not recognize legal separations, although most other states do.)

Conversely, if you are divorced as of the final day of the tax year, then your filing status is usually considered “single” for that year. The exceptions to this rule are (1) you remarry before the final day of the tax year or (2) you are eligible to file as the “head of household” following your divorce.

A head of household is someone who is unmarried and supports and houses a qualifying person. Typically, this means that you have one or more dependent children who live with you. Under IRS rules, a head of household must (1) pay for more than half of the household’s expenses, (2) be unmarried on the last day of the tax year, and (3) have a qualifying child or dependent.

A qualifying child, in turn, must meet the following conditions:

  • The child is the taxpayer’s biological or adopted child, a stepchild, foster child, sibling, step-sibling, half-sibling, or a descendant of one of these relatives.
  • The child lived with the taxpayer in their home for more than 6 months during the tax year.
  • The child is younger than the taxpayer.
  • The child is under 19 at the end of the tax year, or under 24 if they are a college student.
  • The child did not pay for more than half of their own living expenses during the tax year.

A common question we get in our family law practice is whether both parents may claim their child as a qualifying dependent–i.e., file under head of household status–following their divorce. The short answer is “no.” Since a qualifying child must live with the taxpayer for more than half of the tax year, it is not possible for both parents to meet the requirements for a given tax year.

The longer answer, however, is “it depends.” If you have more than one child, for example, it is technically possible for a different qualifying child to live with each parent. Each parent would need to maintain separate residences and pay half of their own household expenses for their respective qualifying child.

Can You Deduct Alimony?

Another common question we get is whether a current or former spouse required to pay maintenance (alimony) may deduct such payments from their federal income tax. Here, the answer will largely depend on when you signed your divorce agreement. If your agreement was signed in 2019 or later, then alimony payments are not deductible from the paying spouse’s income. Such payments are also not considered “income” by the receiving spouse. But for agreements signed on or before 2018, the paying spouse may deduct alimony payments, which are then considered part of the recipient’s income. There is an exception, however, for cases where the divorce decree specifically changes the tax treatment of alimony to the 2019 rules.

Speak with a League City Family Law Attorney

Figuring out your taxes is just one of many issues that arise in the course of a Texas divorce case. An experienced Galveston family law attorney can guide you through the process and help ensure you do not overlook any critical details. Contact the Law Offices of Tad Nelson & Associates today to schedule an initial consultation.