The IRS Filing Status That Could Mean a Bigger Tax Refund

The Internal Revenue Service (IRS) of the United States sets out a course of action for people whose marital status is neither single nor married. Those who divorce could see changes in their tax situation and the way they file taxes.

Likewise, there are also details to keep in mind regarding the application for and eligibility for tax credits. For example, depending on whether the divorce is final or not by the end of the year, the couple will continue to appear as married before the IRS.

How should you file and pay taxes if you got divorced?

Depending on the situation, the taxpayer may have to choose between:

• Married Filing Jointly (married filing jointly)
• Married Filing Separately (married filing separately)
• Single (single)
• Head of Household (head of household)

Depending on the choice, it will affect the standard deduction, eligibility for tax credits, and the final amount that must be paid or refunded.

How do I know if my divorce is recognized by the IRS?

Legal status is determined based on December 31 of the tax year being filed. In this sense, if the couple had not finalized the divorce by the end of the year, the IRS may consider that they are still together and their tax obligations have not changed.

If the divorce has been finalized, you must file as single or, if you meet the eligibility requirements, as Head of Household.

Child custody and child support: important information everyone should know

Child custody is important when filing because children must be claimed as dependents. In this sense, if custody is shared equally, they must agree on who will claim the child, and if no such agreement exists, the IRS applies tie-breaker rules. This is because only one person can claim the child, since it is not possible to split the tax benefits related to the same child.

On the other hand, the parent who receives child support should know that it is not considered income and therefore cannot be deducted from taxes either. Although this may vary depending on the case.

Assets and property after a divorce: Must this be reported to the IRS?

Most transfers of property made between spouses or former spouses as part of a divorce do not generate immediate taxes before the IRS.

This means that, in general, the transfer of a home, vehicle, investments, or other assets is not considered a sale and therefore does not produce taxable gains or losses at the time of the transfer.

However, if a sale is decided later, the agency recommends keeping:

• Divorce decrees.
• Separation agreements.
• Records related to transferred assets.