Divorce and Taxes in California
How Will a Divorce Affect My Taxes?
If you are going through a divorce, taxes may feel even more complicated than they originally did. At Chung & Ignacio, Attorneys at Law, we want to help alleviate some of the frustration that divorce can cause. We have compiled key things you should know about divorce and taxes.
On This Page
- How Divorce Affects Your Tax Filing Status
- How Divorce Affects Child Support
- How Divorce Affects Alimony
- How Divorce Affects Your Assets
Divorce can be complicated, particularly when you need to deal with taxes as well. Contact our attorneys for legal counsel. We prioritize your needs and help ensure your rights are protected.
If you have been divorced recently, this affects your tax filing status. For example, filing as “married” will produce a different outcome than filing as “unmarried.” If you have obtained any of the following documents, you will file as unmarried for tax purposes:
- Final decree of divorce
- Decree of separate maintenance
- Judgment of legal separation
- Decree of separation
If you are unmarried, you can file as either single, head of household, or widow (whichever applies). Being divorced can also affect the tax exemptions for which you qualify. For example, if you qualify to file as Head of Household, your tax rate usually will be lower than if you claim a filing status of single or married filing separately, and you may be able to claim credits like the earned income credit.
The day you receive your final divorce decree plays a large role in how you can file your taxes. If you are still legally married before December 31, you and your ex can still claim joint returns. Many couples choose to do so to obtain the benefits available. They cannot do so after the divorce, though. If the divorce occurs before the end of the calendar year, you must either file as Head of Household or single.
Head of Household
Individuals may opt to file as the “head of household” in order to reduce their tax bill. To do so, they must meet certain requirements.
These factors include:
- Maintaining the household for the children
- Being a U.S. citizen for the entire tax year
- Providing over half the cost to maintain household
- Living apart for more than six months or being unmarried until the end of the year
Child support is neither taxed nor is it tax deductible. The state views the payments as a responsibility of the parent to their child. Because only one parent can claim dependency of their child, the custodial parent can usually claim tax exemptions. Only in few instances are there exceptions to this rule, where the exemption can be traded to the noncustodial parent through IRS Form 8332.
Another example of divorce affecting your taxes is for individuals who pay spousal support. Unlike child support, alimony can be taxed. If you paid alimony to your spouse, you can’t count this as an exemption because it counts toward the gross income of the spouse receiving the spousal support. Alimony is tax deductible by the individual paying it, but counted as gross income for the person receiving it. However, to qualify for tax deduction, the two parties cannot share the same residence.
Assets transferred during the divorce will not be taxed. However, if a spouse receives property from their ex and later decides to sell it, they will be liable for capital gain tax.