Preparing for Tax Season: Filing During or after a Divorce

If this is your first year filing taxes after a divorce or even if your divorce is not yet final, our Georgia divorce lawyers want you to be aware of how the rules and requirements you previously followed may have changed. Tax season can be daunting under any circumstances, but require extra attention now to avoid the risk of future complications, tax liabilities and even audits.

Filing Taxes After Divorce

Internal Revenue Service (IRS) Publication 504 is an invaluable resource for those going through a divorce or separation, and can help you understand changes which may now apply to your situation. The following are four basic topics that will likely impact you when filing taxes after your divorce:

  1. Your filing status: The IRS considers you an unmarried person for the entire tax year regardless of when your divorce was finalized, provided that it occurred on or before December 31.
  2. Your deductions: While the IRS considers your status as unmarried for the entire year, you may be able to claim a higher standard deduction depending on how much of that year you spent living with and supporting your spouse and/or children. You may claim Head of Household status if you paid more than half the cost for the upkeep of the home and had a qualifying person, such as one of your children, living with you for six months or longer.
  3. Alimony and child support payments: Under IRS guidelines, alimony is typically tax deductible by the spouse making payments, but child support is not. Dependency deductions and other tax credits associated with your children can be of considerable value and must be negotiated properly.
  4. Capital gains taxes or losses for property: If you sold your marital home as the result of a divorce, you could end up having to pay capital gains tax if, as a married couple, you netted a sale price $500,000, or over $250,000 as an individual.

Filing Taxes Before Finalizing Divorce

Filing taxes before your divorce is final is often even more confusing to couples, as they generally have the option of filing joint or separate returns. As listed in Publication 504, there are several important factors you will want to consider:

  • If you have a separation agreement in place on or before December 31 of the tax year, you are considered unmarried.
  • If you are considered married for tax purposes, filing a joint return can often result in a lower tax liability, but this depends on your specific situation. Having estimated taxes prepared will help you to determine which status provides the best individual or family benefit
  • At the same time, filing separately could protect you against any tax debts your spouse may owe and may result in a smaller liability or larger refund for you individually.
  • If you have children and you file separately, only one of you can claim your children and any related tax credits on your return. Should both parties do so, it may trigger an unwanted audit.

Do You Have Additional Questions? Contact Our Georgia Divorce Attorneys Today

For additional questions about divorce and the tax ramification before or after your file, contact Stearns-Montgomery & Proctor today. Our Georgia divorce attorneys can help to advise you on the best course of action in your situation, while providing the legal representation you need to protect your assets and interests. We have offices located in Alpharetta, Buckhead, Dunwoody, and Marietta; call or contact us online to see how we can assist you.