Being separated or newly divorced during tax season can cause a person to have many questions about tax rules. Not only are you going through a very tough situation, but you are also trying to come out of it as financially stable as possible. Here are a few tax rules to remember:
Are You Married or Single?
According to the IRS, you are considered still married if your divorce was not finalized by December 31, regardless of having filed for divorce during the year. The opposite also reigns true if your divorce was finalized by the court on or before December 31, you are considered unmarried and must file your taxes as head of household or single.
Should You File Joint Married Return If You’re Still Legally Married?
You have the option of filing a joint married return if you are still legally married. There are several benefits to doing so, one of which is it makes you eligible for a higher standard deduction when you combine your incomes on the same return. However, there is is also a downside to filing jointly. You are liable for all taxes due when you file jointly, even on what your spouse earned personally. This means that if your spouse is less than honest about their income or credits and deductions, you are also responsible for their fraud.
Can You File Head of Household?
Filing as head of household allows you to claim a larger standard deduction, which is $18,350 in 2019. It also allows you to earn more income before moving into a higher tax bracket. However, the IR has strict rules about who qualifies as a head of household. Be sure to visit IRS.gov to see if you qualify.
Who Claims the Kids?
The IRS states that only one parent can claim a child on their tax return per year. You might be able to claim one child and your spouse claim another if you have an even number of children. However, you will be audited if both you and your spouse try to claim the same number of children in the same year. If you can’t agree on who will claim the children, the IRS says that the child will be claimed by the parent with whom the child lived the most during the year.
Can You Deduct the Costs of Your Divorce?
Unfortunately, you can not deduct the cost of legal fees in your tax return. There was a time where you could deduct the fees you paid that were associated with generating income, like paying an attorney to get an alimony order. However, this was eliminated by the TCJA.