Statistically speaking, about half of marriages in the US end in divorce. This means that it's a reality that many people face. You have to deal with a lot during a divorce, not to mention more complicated paperwork during tax time. Read these tips from Kathy Pickering, executive director of The Tax Institute at H&R Block, to make sure you're on top of things for tax day.
Selecting the Right Filing Status
Your marital status on Dec. 31 of the year you are filing tax returns for determines your filing status.
This means taxpayers who are not divorced on that date must continue to use one of the filing statuses for married couples, which are married filing jointly and married filing separately. In some cases, married taxpayers may be able to use the head of household filing status even without being divorced if you have lived apart from your spouse for more than half of the year and provided more than half of the maintenance for your household, which includes son, daughter, stepson, stepdaughter, or eligible foster child.
Being divorced could qualify you to file as head of household if you also meet these two conditions:
- You paid more than half the cost of keeping up your home.
- You had a qualifying dependent living in your home more than half of the year.
Divorced taxpayers who do not qualify to use the head of household status will generally file as single.
Changing Your Name
Depending on where you are now in the divorce process, your name and/or address could've changed.
- After a name change, remember to request a new Social Security card with your new name. Your name on your tax return must match what the Social Security Administration has on file. If it doesn't, it could take much longer to process your tax return and delay the issuance of a tax refund.
- File Form 8822 with the IRS to change your address of record.
Alimony Is Taxable and Deductible
Remember that alimony is taxable and deductible.
- The payer may claim the payments as an above-the-line tax deduction, which means it can be deducted by taxpayers who don't itemize and still reduce taxable income.
- The recipient must claim alimony as taxable income.
- For some recipients, it is beneficial to adjust the amount of withholding on their W-4 or make estimated payments to help avoid having to pay all the taxes resulting from the alimony payments at one time. Making quarterly estimated tax payments is another option.