Divorce in Missouri can profoundly change your life, as well as your taxes and other financial obligations. While juggling property division, custody and parenting time and alimony, it may be essential to also take a keen look at how your tax circumstances might change during and after your separation.
Joint vs. separate returns
Chances are, you filed your taxes jointly with your partner during marriage to enjoy IRS deductions and exemptions. Technically, the IRS will still consider you married until the last day of the tax year, i.e., December 31st, even if the court has already granted you a divorce. Therefore, if both of you are willing, you can continue to file jointly.
If you and your spouse agree to file separate returns, the IRS will expect both of you to pay taxes on any income generated since the date you officially finalized your divorce. This includes wages, alimony payments and investment dividends.
Claiming dependents
When married parents are getting divorced, they must decide who will get to claim their children as dependents during tax season. Your custody and child support agreement will lay out how many overnights and holidays your children spend at each parent’s home. The IRS allows the custodial parent, or the one with whom the child spends most of their time, to claim them as dependents.
The non-custodial parent can only claim dependency if the custodial parent signs IRS Form 8332 or another written statement that grants them permission to claim dependency. In this case, they should file as “Head of household” and attach a copy of the signed statement when filing taxes.
Spousal support and maintenance
You can only report your alimony payments for tax deductions if you divorced before December 31st, 2018, according to the Tax Cuts and Jobs Act. Similarly, couples receiving spousal support must report what they receive and pay taxes on it. However, as of 2019, the IRS doesn’t allow separated couples to report alimony for tax deductions or claim it as income when filing for taxes.
Understanding how your taxes will change after a divorce can help you save both time and money when filing your taxes post-separation. Mistakes often lead to penalties that will make life even harder during this already difficult time.