Filing Taxes After Divorce: What You Need to Know

 Posted on June 28, 2024 in Divorce

Navigating the complexities of tax filing can be challenging, and post-divorce tax preparation comes with its own set of unique considerations. In Illinois, understanding how to handle your taxes after a divorce is crucial to avoiding complications and ensuring compliance with various laws. Discuss with your divorce attorney how your divorce will affect your taxes and future.

Determining Your Filing Status

One of the first steps in preparing your taxes after a divorce is determining your filing status. Your marital on December 31 of the tax year dictates your filing status. If your divorce was finalized by December 31, you are considered unmarried for the entire tax year. You may then file as either "Single" or, if you meet certain criteria, as Head of Household." Understanding the Head of Household status qualifications can provide tax benefits, so it is worth exploring if you qualify.

Addressing Alimony and Child Support

Alimony and child support are treated differently for tax purposes in Illinois. For divorces finalized after 2018, alimony payments are no longer deductible by the payer and are not considered taxable income for the recipient due to changes in tax law. Child support has never been a deductible expense for the payer, nor is it taxable income for the recipient. Being clear on these distinctions will help you accurately report your income and deductions.

Claiming Dependents

Deciding who can claim dependents is often an important issue after a divorce. Typically, the custodial parent (the parent with whom the child resides for the greater part of the year) has the right to claim the child as a dependent. However, parents can agree to alternative arrangements, such as alternating years for claiming the child. Any such agreement should be clearly outlined in your divorce decree to avoid conflicts during tax season.

Tax Implications of Property Settlements

Property settlements can also have significant tax implications. Generally, the transfer of assets like a home or investments between spouses due to divorce is not taxable. However, understanding the potential future tax liabilities, such as capital gains taxes, is crucial when negotiating property settlements. Proper planning and consulting a tax professional can help avoid unexpected tax burdens down the road.

Contact a Wheaton, IL Divorce Lawyer

Filing taxes after a divorce may seem intimidating, but with the right information and resources, you can manage it effectively. By understanding your filing status, how to handle alimony and child support, who can claim dependents, and the tax implications of property settlements, you can confidently approach tax season. For legal help, contact our DuPage County, IL divorce attorney with The Stogsdill Law Firm, P.C.. Call 630-462-9500 for a confidential consultation.