Taxes are an unavoidable task, divorced or not. For married couples who are in the divorce process or have a decree for dissolution of marriage, tax consequences significantly influence their tax filing and the amount of money they receive. Tax issues such as income tax, alimony, child support and child custody are important tax information and divorce consequences.
Tax responsibility after divorce
After the divorce, former spouses may be relieved from joint liability of the marriage. They may no longer be impacted by the taxes, interests and penalties of the other spouse. If former spouses are divorced at the time of fling but were married during the taxable year, a spouse can ask for separation of liability. The divorced joint files may get relief if they have not lived together for 12 months before the last date of the tax year of filing that they are seeking.
If a divorcing couple is still legally married as of December 31 of the year of filing taxes, the couple is considered married for purposes of filing for that tax year. The couple may file as married joint filing or married separate filing. If they file as married joint filing, the combined income may result in a higher tax return.
Couples whose order for dissolution of marriage was in effect as of December 31 of the tax filing year may file as individual tax filers. This may significantly impact the spouse who has a lower income or may not have worked during the tax year.
Alimony paid and received under a divorce decree executed after 2019 is not deductible for the paying spouse nor can be included as income by the recipient.
Child custody and child support
The custodial parent may file their child as a dependent on the tax return if the child qualifies. Additionally, the noncustodial parent may be treated as them having the qualifying child if the custodial parent signs a release form, and the noncustodial parent attaches it to their tax return.
The parent who claims the child as a dependent may claim the Earned Income Tax Credit. However, the parent who pays child support and the parent who received child support cannot deduct the tax returns payments.