Isabella Carter
Understanding your legal status when it comes to filing taxes after a separation is crucial. The Internal Revenue Service (IRS) considers a couple married for filing purposes until they have a final decree of divorce or separate maintenance, which can complicate taxes. Legally separated couples need to adjust the amount of tax withheld from their paychecks and may have to file a new Form W-4 with their employer. They may also need to report alimony payments differently, and their eligibility for certain credits and deductions may change. If you're legally separated, you can choose the married filing separately status, but this can lead to higher taxes. To be considered unmarried for tax purposes and file as head of household, specific criteria must be met. Understanding these nuances is essential for accurate tax filing.
| Characteristics | Values |
|---|---|
| Filing status | Married filing separately |
| Filing requirements | Individual income, deductions, and credits |
| Eligibility for certain credits | Depends on the state |
| Alimony | Not deductible by the payer spouse and not taxable to the payee spouse if the agreement was signed in 2019 or later |
| Alimony | Deductible by the payer spouse and taxable to the payee spouse if the agreement was signed in 2018 or before |
| Child support payments | Not deductible by the payer and not taxable to the payee |
| Property transfers | No recognized gain or loss |
| Retirement plans | The ex-spouse may become entitled to a portion of the account balance |
| Form W-4 | Must be submitted within 10 days of divorce or separation |
| Form 8857 | To be filed for requesting relief |
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What You'll Learn
Filing status
The IRS considers you married for the entire tax year if you have no divorce decree or legal separation agreement by December 31st. So, if you’re separated, you are still legally married and you must file taxes as a married couple. While you may think you should file a separate tax return, or file as Single, your filing status should generally be either "Married Filing Jointly" or "Married Filing Separately".
If you are considered legally separated, you can choose the "Married Filing Separately" status. This can lead to higher taxes but can avoid shared liability for each other's tax obligations. If you have no separate maintenance decree or decree of legal separation by the final day of the year, the IRS considers you married for the entire tax year.
If you are unmarried, your filing status is single or, if you meet certain requirements, head of household or qualifying surviving spouse. If you are married, your filing status is either married filing a joint return or married filing a separate return. If you are divorced or legally separated at the end of the tax year, you can't deduct contributions you make to your former spouse's traditional IRA.
If you are married or legally separated, one of you may be eligible to file as head of household if all of the following apply: your spouse didn't live in your home for the last 6 months of the year; you paid more than half the cost of keeping up your home for the year; your home was the main home of your dependent child for more than half the year; and you must file amended returns for all tax years affected by the annulment that aren't closed by the statute of limitations.
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Alimony and separate maintenance payments
For alimony or separate maintenance payments to be deductible from the payer spouse's income, and included in the income of the receiving spouse, several requirements must be met:
- The spouses do not file a joint return with each other.
- The payment is in cash, including checks or money orders.
- The payment is made to a spouse or former spouse under a divorce or separation instrument.
- The spouses are not members of the same household when the payment is made (this requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance).
- There is no liability to make the payment after the death of the recipient spouse.
- The payment is not treated as child support or a property settlement.
- The divorce or separation agreement does not designate the payment as not includable in the gross income of the payee spouse and not allowable as a deduction to the payer spouse.
It is important to note that not all payments under a divorce or separation instrument are considered alimony or separate maintenance. Voluntary payments, such as child support, are not deductible and are not considered income. Additionally, alimony or separate maintenance payments made under a divorce or separation agreement executed after 2018 are not deductible from the payer spouse's income and are not included in the income of the receiving spouse.
To report alimony received, individuals can use Form 1040 or Form 1040-SR (with Schedule 1 attached) or Form 1040-NR (with Schedule NEC attached). They must provide their SSN or ITIN to the spouse making the payments to avoid a $50 penalty. For those making alimony or separate maintenance payments, these can be deducted from income on Form 1040 or Form 1040-SR, and the SSN or ITIN of the receiving spouse must be provided to avoid a $50 penalty.
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Child support payments
The custodial parent is the one with whom the child lived for the greater number of nights during the year. The other parent is the non-custodial parent. The payer of child support may be able to claim the child as a dependent if they are the child's custodial parent for federal income tax purposes. In this case, the payer is generally the parent entitled to claim the child as a dependent under the rules for a qualifying child if the other tests for claiming the child are met.
If the payer is the non-custodial parent, they may only claim the child as a dependent if a special rule for a child of divorced or separated parents (or parents who live apart) applies. This rule requires, in part, that the custodial parent signs and provides the non-custodial parent with a Form 8332, 'Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent'. The non-custodial parent must attach the Form 8332 to their return.
If you are married or legally separated, one of you may be eligible to file as head of household if your spouse didn't live in your home for the last 6 months of the year, you paid more than half the cost of keeping up your home for the year, and your home was the main home of your dependent child for more than half the year.
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Property transfers
When it comes to property transfers, there are several things to keep in mind. Firstly, the Internal Revenue Service (IRS) considers a couple married for filing purposes until they obtain a final decree of divorce or separate maintenance. This means that if you are separated but not divorced by December 31 of the tax year, you must still file taxes as a married couple, either jointly or separately.
Secondly, there is generally no recognized gain or loss on the transfer of property between spouses or former spouses if the transfer is due to a divorce. This means that if you sell property that you own jointly to split the proceeds as part of your divorce settlement, there is typically no tax implication. However, you may need to report the transaction on a gift tax return, and there are certain exceptions to this rule, such as when the spouse or former spouse is a nonresident alien.
Thirdly, if you are transferring property to a former spouse, it may be subject to federal gift tax unless it meets certain exceptions. For example, it must be made in settlement of marital support rights. If your transfer does not qualify for an exception, you must report it on a gift tax return.
Additionally, if you are paying legal fees for your divorce, these are generally not tax-deductible. However, for tax years prior to 2018, you may be able to deduct portions of the fees related to tax advice and alimony if you have itemized billing statements.
Finally, if you receive alimony or separate maintenance payments, you may need to adjust your withholding or make estimated tax payments. These payments are generally deductible by the payer spouse and must be included in the income of the recipient spouse, but this depends on the specifics of your agreement.
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Retirement plans
If you participate in a retirement plan and get divorced, your ex-spouse may become entitled to a portion of your account balance under a Qualified Domestic Relations Order (QDRO). IRAs, on the other hand, are governed by different tax rules and do not require a QDRO, but careful planning is still necessary to avoid tax consequences.
Under a QDRO, benefits paid to a spouse or former spouse are generally included in the recipient's income. Additionally, if you receive payments under a QDRO, you must include them in your income unless you roll them over into a traditional IRA and meet certain conditions. Amounts included in income under a QDRO are not subject to the 10% early distribution tax.
Furthermore, the Tax Cuts and Jobs Act (TCJA) eliminated personal and dependent exemptions from 2018 through 2025, impacting tax benefits for couples filing jointly or separately. Legally separated couples may also retain spousal health insurance coverage, which is typically lost after a divorce, and they may still file joint tax returns, potentially benefiting from lower taxes.
When it comes to filing taxes, the IRS considers a couple married until they have a final decree of divorce or separate maintenance. If you are legally separated, you may be able to file a separate return and still take certain credits, such as the credit for child and dependent care expenses. Additionally, if you decide to file separately, you might be eligible for the Head of Household (HoH) filing status, which can provide financial benefits.
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Frequently asked questions
The IRS considers you married for the entire tax year if you have no divorce decree or legal separation agreement by December 31st. So, if you’re separated, you are still legally married and you must still file taxes as a married couple.
If you are legally separated, you can choose the "married filing separately" status. You will need to report your own income, deductions, and credits on your individual return.
Married couples filing jointly report their combined income and deduct their combined allowable expenses. In some cases, you may be relieved from liability for taxes owed on a joint return. Filing separately can lead to higher taxes but avoids shared liability for each other's tax obligations.
If you receive alimony, you may have to make estimated tax payments. You will also need to file a new Form W-4 with your employer to claim the proper withholding.
