Tax Filing Status After Divorce
The process of divorce can have significant implications on various aspects of an individual’s life, including their tax filing status. The North Dakota Century Code does not directly address tax implications of divorce, as tax laws are primarily governed by federal law. However, understanding the general principles of how divorce impacts tax filing status can be beneficial.
Determining Filing Status
The Internal Revenue Service (IRS) determines your filing status based on your marital status on the last day of the tax year. If your divorce is finalized by December 31, you are considered unmarried for the entire year and cannot file a joint tax return. If you are still legally married on December 31, you can file as married filing jointly or married filing separately.
Single or Head of Household
After a divorce, most individuals will file as Single. However, if you have dependents, you may qualify for the Head of Household status, which typically results in a lower tax rate than the Single filing status. To qualify as Head of Household, you must meet several criteria, including:
- You are unmarried or considered unmarried on the last day of the year.
- You paid more than half the cost of keeping up a home for the year.
- A qualifying person lived with you in the home for more than half the year.
Dependents and Exemptions
Determining which parent can claim children as dependents after a divorce can be complex. Generally, the custodial parent, or the parent with whom the child lived for the greater part of the year, is eligible to claim the child as a dependent. However, this can be altered by the terms of a divorce decree or by completing IRS Form 8332.
Alimony and Child Support
Under the Tax Cuts and Jobs Act of 2017, for divorce agreements executed after December 31, 2018, alimony is no longer deductible for the payer and is no longer taxable income for the recipient. Prior to this change, alimony was deductible by the payer and considered taxable income by the recipient. Child support is not deductible by the payer and is not considered income by the recipient.
Property Transfers
Property transfers between spouses as part of a divorce settlement are typically not taxable. However, there may be tax implications when the property is sold.
It is important to consult with a tax professional or attorney to understand the specific tax implications of your divorce. This article provides a general overview and does not constitute legal or tax advice.