What Do You Need to Know About Filing Taxes After Divorce?

Filing taxes after a divorce requires a few immediate checks and careful documentation. Your status on December 31 determines how you file for the entire tax year, and several common post‑divorce items change how you report income and claim tax benefits.

Quick checklist (what to confirm first)

  • Confirm your marital status on December 31 — this determines your filing status for the year (Single, Head of Household, or, rarely, Married Filing Separately). See IRS Publication 501 for details (https://www.irs.gov/pub/irs-pdf/p501.pdf).
  • Decide who will claim any dependents and document any agreement in writing (the custodial parent usually claims children unless Form 8332 is signed).
  • Update payroll withholding using Form W-4 to reflect your new situation (https://www.irs.gov/forms-pubs/about-form-w-4).
  • Gather year‑end tax documents: W‑2s, 1099s, 1099‑R, settlement paperwork, QDROs or IRA transfer statements, and property sale closing statements.

Key rules that commonly affect divorced taxpayers

  • Filing status: If you’re legally divorced by 12/31, you cannot file Married Filing Jointly for that year. If you’re unmarried and support a qualifying child or relative, Head of Household can provide a higher standard deduction and better tax rates — see the linked Head of Household guidance below.
  • Dependents and the custodial parent: The custodial parent (the parent the child lived with the most during the year) generally has the right to claim the child for most tax benefits. A noncustodial parent can claim the child only if the custodial parent signs Form 8332 to release the claim (https://www.irs.gov/forms-pubs/about-form-8332).
  • Alimony: For divorce or separation instruments executed after December 31, 2018, alimony is not deductible by the payer and is not taxable to the recipient. For agreements executed before 2019, the old rules (deductible by payer, taxable to recipient) may still apply — check your decree and consult IRS guidance or a tax professional.
  • Retirement accounts and QDROs: Transfers ordered by a Qualified Domestic Relations Order (QDRO) for employer retirement plans are generally non‑taxable when done correctly; IRA transfers require careful documentation. Keep rollover paperwork and 1099‑R forms for your return.
  • Property transfers and basis: Dividing property in a settlement changes who reports future sales and which taxpayer uses the original cost basis. The settlement should specify cost‑basis allocation; retain closing statements and settlement language.

Common forms you’ll likely use or see

  • Form W-4 — update withholding after divorce.
  • Form 8332 — custodial parent releases claim to dependency exemptions and associated credits.
  • Form 1099 series and 1099‑R — report income from investments, retirement distributions, and rollovers.
  • Form 1040 — your individual tax return; choose the correct filing status.
  • QDRO paperwork or IRA transfer statements — support non‑taxable transfers between spouses.

Credits and deductions to review

  • Child Tax Credit and Additional Child Tax Credit — eligibility depends on who can claim the child and the child meeting relationship, age, residency, and support tests.
  • Earned Income Tax Credit (EITC) — filing status and residency of qualifying children affect eligibility.
  • Child and Dependent Care Credit — the person who paid the care expenses and meets the work‑related rules may claim this credit.

Practical strategies and recordkeeping

  • Put agreements in writing. If you and your ex agree who will claim a child in a later year, use Form 8332 or spell out terms in the divorce decree.
  • Update payroll and benefits promptly to avoid under‑ or overwithholding. In my practice, I’ve seen clients avoid large balances by adjusting withholding the pay period after decree finalization.
  • Keep tax‑relevant settlement language and closing documents with your tax records for at least seven years, especially if the settlement allocates basis or future sale proceeds.
  • When in doubt, file using the status you qualify for on December 31 and consult a tax professional if the settlement creates complicated allocations or a QDRO is necessary.

When to get professional help

If your settlement divides pensions, deferred compensation, business interests, or real estate — or if you’re unsure about alimony treatment because your decree spans the 2018 change — consult a CPA or tax attorney. These items can create reporting requirements and future tax consequences that benefit from specialist review.

Further reading and internal resources

This entry is educational and not a substitute for personalized tax advice. Tax law changes and thresholds are adjusted annually — consult the IRS (https://www.irs.gov) or a licensed tax professional for guidance specific to your situation. (See IRS Publication 501 and Publication 17 for authoritative details: https://www.irs.gov/pub/irs-pdf/p501.pdf and https://www.irs.gov/pub/irs-pdf/p17.pdf.)