Life changes
Getting Divorced: How It Changes Your Tax Return
The decree decides a lot, but it does not decide everything the IRS cares about. Filing status, who claims the children and how assets were split all show up on the return.
Reviewed by LaToya Clark-Thompson, FounderLast updated
Your filing status for the year
Like marriage, divorce is judged on the last day of the tax year. If your divorce was final by then, you are unmarried for the whole year and file as single or, if you qualify, head of household. If you were still legally married on that day, your options are married filing jointly or married filing separately.
There is one exception worth knowing. If you were still married but lived apart from your spouse for the last six months of the year, paid more than half the cost of keeping up your home, and a dependent child lived with you more than half the year, you may be considered unmarried and able to file as head of household. Our head of household guide covers the tests.
Children, support and alimony
For tax purposes the child generally belongs to the custodial parent, meaning the parent the child lived with for more nights during the year. That parent can claim head of household, the earned income credit and the child and dependent care credit. The custodial parent can release the child tax credit to the other parent by signing Form 8332, but the other benefits do not move with it.
Child support is never deductible by the parent who pays it and never income to the parent who receives it. Alimony depends on when your agreement was signed. Under the rules that apply to current agreements, alimony is neither deducted by the payer nor reported by the recipient. Older agreements may still follow the previous rules, so bring the agreement itself.
Splitting retirement accounts and the house
- A workplace plan divided under a qualified domestic relations order (QDRO) is not taxed to the plan owner. The receiving spouse is taxed only when money comes out, and a distribution taken directly under the QDRO may avoid the early withdrawal penalty.
- An IRA split under the decree can be moved tax-free with a transfer incident to divorce. Cashing it out instead is taxable, and Form 1099-R will show it.
- Property moved between spouses as part of the divorce is generally not a taxable sale. The receiving spouse keeps the original cost basis, which matters when the home or investments are sold later. See selling a home.
What to bring to your appointment
- The divorce decree or separation agreement, including the pages on support, dependents and property
- Any signed Form 8332
- W-2s, 1099s and every Form 1099-R tied to a retirement split
- Form 1098 for any home you kept or sold, and the closing statement if it was sold
- Form 1095-A if Marketplace coverage was shared during the year
- Last year’s joint return, so carryovers can be divided correctly
Common mistakes, and when to get help
- Both parents claiming the same child, which usually triggers a letter to both
- Assuming the decree overrides tax law. A decree can say who claims a child, but the IRS still needs Form 8332 from the custodial parent.
- Cashing out a retirement account to pay legal fees without planning for the tax
- Not updating your W-4 and address (Form 8822) after you move out
A divorce year is one of the better times to have a preparer. We read the agreement, work out which credits belong to you, and prepare the return around it. If a past joint return had problems that were your former spouse’s doing, innocent spouse relief (Form 8857) may apply; that is a request where the independent licensed CPA we work with can step in, with our office coordinating. Start with tax preparation or book a first appointment.
Frequently asked questions
Can I file single if my divorce is not final yet?
Not if you are still legally married on the last day of the tax year. You would file married filing jointly or separately. You may qualify as head of household instead if you lived apart from your spouse for the last six months of the year, paid most of your home’s costs and had a dependent child living with you. We check those tests at your appointment.
Who gets to claim the kids after a divorce?
The custodial parent, the one the child lived with for more nights, unless that parent signs Form 8332 releasing the child tax credit to the other parent. Head of household, the earned income credit and the dependent care credit stay with the custodial parent either way. A decree that says otherwise still needs the signed form to be honored on the return.
Is alimony taxable income?
For agreements signed under current law, no: the payer cannot deduct it and the recipient does not report it. Some older agreements still follow the earlier rules, where alimony was deductible and taxable, and a later modification can change which rules apply. Bring the agreement and any amendments so we can confirm which treatment fits yours.
Do I pay tax when I get half of my spouse’s 401(k) in a divorce?
Not when it is divided under a qualified domestic relations order and rolled into your own retirement account. You are taxed only when you take money out. A distribution paid to you directly under the order is taxable but may escape the early withdrawal penalty. Each step shows on Form 1099-R, so bring every one you receive.
Not the question you had? The full tax FAQ covers more ground, and our client reviews say what the work is actually like.
Related pages
Single parent, head of household
The head of household tests, who counts as a qualifying person and the mistakes to avoid.
Learn moreYou got married
Filing status, withholding, name changes and Marketplace coverage after the wedding.
Learn moreYou sold a home
The main home exclusion, Form 1099-S, basis and improvements, and when a sale is taxed.
Learn moreYour child is getting older
Why the refund drops when a child ages out of credits, and what still applies.
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