How Divorce Changes Your Taxes: Everything You Need to Know
Divorce affects almost every aspect of your tax situation. Here's what changes and how to prepare.
Filing Status Changes
Your filing status is determined by your marital status on December 31st. If your divorce is final by year-end, you file as Single or Head of Household — not Married.
Head of Household offers significantly better tax brackets and a higher standard deduction ($22,500 vs $15,000 for Single). You qualify if you're unmarried, paid >50% of household costs, and have a qualifying dependent.
Standard Deduction Impact
Two single filers get $30,000 combined — the same as joint. But if one qualifies for Head of Household, the combined deductions increase to $37,500.
Child Tax Credit
The Child Tax Credit is $2,000 per qualifying child. Only one parent can claim each child. The custodial parent (more overnights) typically claims, but you can agree otherwise using IRS Form 8332.
Strategy: If one parent's income is above the phaseout ($200,000 single / $400,000 joint), it's better for the lower-income parent to claim the children.
Alimony Tax Treatment
For divorces finalized after 2018, alimony is:
This is a significant change from pre-2019 rules.
Property Division
Transfers of property between spouses as part of a divorce are generally not taxable events. However, the receiving spouse takes on the original cost basis, which matters when they eventually sell.
Retirement Account Splits
Dividing a 401(k) or pension requires a Qualified Domestic Relations Order (QDRO). When done correctly, this transfer is tax-free. Without a QDRO, early withdrawal penalties and income tax apply.
Use Our Tax Impact Calculator
Try our tax impact calculator to see exactly how your taxes change after divorce based on your specific situation.