What to Know About Divorce and Your 2020 Tax Return

Tax time can be stressful, and some tax years can be more complicated than others – especially when a couple is facing a divorce. This is because there are more tax issues to consider when a divorce is involved. From your filing status, to claiming dependents, to your tax refund, there are many items to consider when preparing a tax return during or after a divorce.

Because divorce can be complex and taxes can be complicated, we highly advise that you lean on your experienced divorce attorney to guide you through any questions or issues you come across when filing your tax return. To help you think through the process, we have put together the following questions and answers regarding taxes during or after a divorce:

Am I considered married or single?
If your divorce was not finalized in the year 2020 and was still in progress, then you are considered married for your 2020 tax return. There may be benefits to filing jointly, so if you and your soon to be ex-spouse would like to file together one last time, please consult with your spouse regarding the possibility of filing joint tax returns. If, as of December 31, 2020, your divorce was considered final, then the IRS would categorize you as being single. You may also qualify as head of household if you are caring for minor children more than fifty percent of the overnight periods.

Is there a reason why filing jointly may not be the best option?
When you file a joint return, you are liable for all the taxes due. This means that if your soon to be ex-spouse earned more than you, and did not pay taxes on that amount, the IRS could turn to you to collect those taxes due. If you are not worried about this issue, then filing jointly may be a good option for you. We advise you to talk through what is best with your attorney.

What does it mean to file as the “head of household” if we are still married but living apart?
According to the IRS, if you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. If you qualify to file as head of household instead of as married filing separately, your standard deduction will be higher. Also, your total taxes may be lower, and you may be able to claim the earned income credit.

RELATED: Read about understanding taxes during your divorce.

What are some deductions I should be aware of as a result of divorce?
Divorce Expenses – Due to the Tax Cuts and Jobs Act of 2017, you cannot deduct expenses associated with a divorce.
Child Support and Alimony – Neither is taxable to the recipient or tax deductible to the payor.
Claiming Dependents – If children are involved and you are trying to figure out who can claim them as dependents, usually the parent with the greater number of overnights will be eligible to claim the children as dependents; however, ensure this is clear while you are working out the details of your divorce.

It is important to discuss tax issues with your experienced divorce attorney and ensure the person who prepares your tax return is aware of your marital status and your plans and/or wishes.

While there is a lot to consider when filing your taxes after a divorce, it is comforting to know there are legal professionals with the right experience available to help you every step of the way. To learn more about what Wilder Mahood McKinley & Oglesby can do to resolve your tax issues, contact us online or call our office in Pittsburgh, Pennsylvania at 412-261-4040.

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