Common Federal Income Tax Issues That Can Arise After Your Divorce

Divorce represents not just a significant change in your personal life but also your status as a taxpayer. There are a number of tax-related issues you need to consider as part of a divorce proceeding, including how to deal with alimony–as either the payer or recipient–and how to assign certain deductions like those for dependent children.

When Are You Considered “Divorced” by the IRS?

Divorce is a matter of state law. But when it comes to federal taxation, the Internal Revenue Service considers you legally married until you obtain a final decree of divorce from a California court. As a general rule, your status as of December 31 determines your tax status for the preceding year. So if you were in the middle of a divorce proceeding in 2022, the IRS still considers you married for the 2022 tax year if you were still legally married on December 31, 2022.

What Is Your Post-Divorce Filing Status?

Generally, you will file a federal tax return as a single person starting with the year that your divorce became final. In some cases, you can claim “head of household” status if you were separated–i.e., living and apart from your spouse but not divorced–if all of the following conditions are met:

• Your spouse did not live in your home for at least 6 months of the tax year in question;
• You paid more than half the cost of maintaining your home for the entire year; and
• Your home was the primary residence of at least one dependent child for more than half the year.

Who Claims a Dependent Deduction and/or Tax Credits After a Divorce?

In most cases, the parent with legal custody of a minor child can claim them as a dependent on their individual tax return. But there are situations where the non-custodial parent may claim the dependent deduction. This is typically when the parents have a written agreement–incorporated into a marital settlement agreement and final divorce judgment–stating the non-custodial parent will claim the child as a dependent for tax purposes. This same rule applies to any child tax credits.

How Does Alimony Affect Income Tax?

If your divorce became final prior to 2019, the spouse paying support may claim alimony payments as a deduction from taxable income. Congress changed the rules in 2019 to eliminate this alimony deduction until 2025. Anyone whose divorce became final in 2019 or later cannot deduct alimony payments. Conversely, the person receiving alimony after 2019 does not have to pay taxes on that income. But anyone receiving alimony under a pre-2019 agreement must continue reporting and paying taxes on that income.

Speak with a San Jose Divorce Attorney Today

These are just some of the many tax issues that can impact a divorce. It is important to work with an experienced San Jose divorce attorney who can fully review your financial situation and advise you of any potential issues that may arise after your marriage ends. Contact Foster Hsu, LLP, today to schedule a consultation with a member of our staff.