Couples who divorced in the last year or will be divorced before they need to file their taxes this April may have questions about their filing status or what credits they can claim. If you and your spouse were filing a joint return each year, you need to know what changes to make when filing taxes during and after a divorce.
Tax Filing Status
If you and your spouse divorced before December 31, 2022, you can file as “single” or as the “head of household” when filing your 2022 taxes in 2023. However, if your divorce wasn’t final until after January 1, 2023, you can still file a joint tax return or file as “married, filing separately.”
Remember that filing jointly would require you and your now ex-spouse to agree to certain terms and responsibilities. If your ex-spouse pays alimony, would they expect you to pick up most of the burden if you owe on your joint taxes this year?
If you and your ex-spouse file as married, filing separately, a tax professional can help you determine your share of household contributions and what you would owe to the IRS (or what you are due from the IRS).
Who Claims Children as Dependents To Receive Child Tax Credits?
For low- or middle-income families, the Child Tax Credit (CTC) is a refundable credit the government allows one parent to claim for a tax year. You and your spouse should include an agreement for who receives the CTC or can claim children as dependents in your divorce agreement for tax purposes.
For many families, ex-spouses negotiate an agreement to alternate years for claiming the CTC. However, that may not be the best solution for your situation. Get tax advice for filing taxes during and after a divorce from a tax professional.
Property Division and Taxes in Virginia
Title transfers between ex-spouses are non-taxable. However, selling certain properties could result in a tax obligation, such as a primary residence sold for over $500,000, a transfer of stocks that gained value since purchase, or the sale of a second home.
If you and your ex-spouse own a business together, you or your ex-spouse may decide to buy out the other’s share or continue to co-own the business. In either scenario, there would not normally be tax issues. However, if you and your spouse decide to sell the business to a third party, you could incur a tax debt for the sale.
Alimony (Spousal Support) Is Not Tax-deductible in Virginia
For any divorce after December 31, 2018, payor spouses can no longer claim alimony as a tax deduction, and recipient spouses don’t have to claim spousal support as taxable income.
Contact a Virginia Divorce Attorney To Learn More About Divorce and Taxes
Filing taxes during and after a divorce can be a complex issue for recently divorced couples in Virginia. If you want to file for divorce before the upcoming tax season, call us at DiPietro Law Group at (888) 530-4374 or contact us online to schedule a consultation with a divorce attorney.