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Income tax considerations for parents during divorce

On Behalf of | Jan 9, 2023 | Divorce

If you’re divorcing this year, you and your spouse will likely be filing a joint income tax return for the last time. It’s not too early, however, to start thinking about your taxes for Tax Year 2023, when you’ll each be filing separately. That’s especially true if the two of you have children you’ll be co-parenting.

Working out and codifying how you’ll handle certain elements of your tax returns next year will help prevent conflict and confusion. It can also help you both save money. Let’s look at some crucial things to consider.

Your filing status

If your divorce is final by Dec. 31 of this year (assuming you don’t remarry), you need to file as either “single” or “head of household.” Head of household status requires three things. You must:

  • Be unmarried on Dec. 31 of the tax year
  • Pay for over half of household expenses for the year
  • Have a qualifying child or other dependent living with you for over half the year

If you’re divorcing this year and your spouse is still contributing to the property taxes, mortgage, insurance and utility bills, you may need to gather some documentation to determine whether you contributed more than half. However, you still can’t file as head of household without a dependent.

Claiming a child as your dependent

Once you and your spouse start filing separately, only one of you can claim a particular child as a dependent in any given year. Divorced couples with one child for whom they share co-parenting duties often agree to alternate years. That way each of them gets the preferred head of household status on alternate years.

That involves stating that your child lived with you at least one day more during the year than with their other parent. If you have two children, you may each claim one as a dependent. In that case, you can both use head of household status in the same year. It’s best to work this out during your custody negotiations so that you can show the IRS the parenting schedule if it’s ever called into question.

Just as you don’t share a family law attorney with your soon-to-be-ex, you also want to get your own financial and tax professionals rather than rely on those who’ve worked for you as a couple. With sound guidance, you can help minimize some unnecessary tax pitfalls after your divorce.