How Will Divorce Affect My Taxes?
Getting divorced can impact your finances in many different ways. You might go from a two-income household to having a single income, or you might need to go back to work if you took a hiatus. You might need to pay spousal support or child support, and you might face new expenses. Another important change occurs with your tax returns. If you were divorced in 2019, it is important to know the many ways your tax returns might be different this spring.
Many tax programs and accountants autofill personal information for filers, such as your name and address. However, if you have recently been divorced, you might have changed your name and/or where you live. If you want your taxes to be under your changed name, you should take the necessary steps through the Social Security Administration (SSA) to get a new identification card with your officially changed name. You also should file Form 8822 if you have a new home address.
One of the first steps after a divorce should be to update your W-4 with your employer with the appropriate withholding allowances. Your withholdings will directly impact your tax liability or refund, and it should reflect your unmarried status, as well as account for your children.
Determine Your Correct Filing Status
If your divorce was final prior to December 31, 2019, you will need to update your filing status back to single as you cannot file as married, even if you were married for most of the year. If you are still in the process of getting divorced as the new year rings in, you will still need to file as married. However, you have the option of filing joint returns for separate but married.
There are different reasons why you might want to file separately, and you might be eligible for head of household status on your separate but married returns. You should discuss the best option for filing status with a CPA, as filing with the wrong status can result in higher tax liability or challenges with the IRS.
The Tax Cuts and Jobs Act of 2017 significantly changed how alimony and taxes work, and these changes will apply if your divorce was final and your spousal support order was issued in 2019. If you are paying alimony, you can no longer claim those payments as a deduction. If you are receiving spousal support, you do not have to claim the support payments as taxable income anymore.
Contact an Experienced Murfreesboro Divorce Attorney for More Information
Many aspects of your life will change after a divorce, and taxes are only one major change. At the law firm of Dotson & Taylor, our Murfreesboro divorce lawyers advise clients on all the possible implications of ending their marriages, as well as help them through every step of the divorce process. Call 615-890-1982 or contact us online if you would like to consult with our legal team directly.