Tax season can be overwhelming on its own—but if you’re also navigating a divorce, the financial stress can feel even heavier. You may be wondering: How does my divorce affect my taxes? The truth is, your marital status and the terms of your divorce agreement can have a significant impact on how you file and how much you owe (or receive) at tax time.
At Jacobson Family Law, we understand how complex this intersection of tax law and family law can be. That’s why we’ve put together this updated guide to help you understand how divorce may affect your taxes in 2025 and beyond.
🧾 How Divorce Affects Your Taxes
1. Filing Status
Your marital status as of December 31 determines your filing status for that tax year. Here’s how it works:
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Still married on December 31? You can file as Married Filing Jointly or Married Filing Separately.
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Divorced or legally separated by December 31? You must file as Single or possibly Head of Household, depending on whether you meet specific IRS criteria.
Why it matters: Your filing status can significantly impact your tax bracket, eligibility for credits, and overall tax liability.
2. Alimony and Taxes
The Tax Cuts and Jobs Act (TCJA) changed how alimony is treated for tax purposes:
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For divorces finalized after January 1, 2019:
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Alimony payments are not tax-deductible for the payer.
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Alimony is not considered taxable income for the recipient.
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For divorces finalized before January 1, 2019 (and not modified):
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The old rules still apply—alimony is deductible for the payer and taxable for the recipient.
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Pro tip: If you’re negotiating a divorce settlement now, keep these tax implications in mind when calculating spousal support.
3. Child Support and Tax Credits
Unlike alimony, child support is neither taxable nor tax-deductible. However, tax credits related to children can be a major source of confusion:
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Only one parent can claim the Child Tax Credit and other dependent-related tax benefits per year.
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Typically, the custodial parent claims these credits unless otherwise agreed in the divorce decree.
Important: Clarify in your settlement agreement who will claim these credits to avoid IRS disputes later.
4. Property Division and Capital Gains
Dividing property during divorce generally does not trigger a taxable event—but it can have future tax consequences, especially with:
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The marital home:
If you sell it as part of the divorce, you may face capital gains taxes, depending on how much profit you make and how long you lived there. -
Investment assets:
Be mindful of unrealized capital gains when dividing stocks or other investments. Selling later may result in significant tax liabilities.
Tip: Work with a financial advisor or tax pro to understand the tax basis of transferred property.
5. Retirement Accounts and QDROs
Dividing retirement accounts such as 401(k)s or pensions during divorce requires careful planning:
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Use a Qualified Domestic Relations Order (QDRO) to divide retirement accounts without incurring early withdrawal penalties or triggering immediate taxation.
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IRAs may not require a QDRO, but the transfer must still be done correctly to avoid tax consequences.
Mistakes in this area can be costly, so professional guidance is essential.
✅ How to Protect Yourself During Divorce and Tax Season
Divorce is not just an emotional process—it’s a financial one, too. Understanding the tax implications of your divorce settlement is key to securing your financial future.
Work with Professionals:
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A divorce attorney who understands the legal and tax implications of asset division, support payments, and custody arrangements.
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A tax professional who can guide you through the specific IRS rules and ensure you’re filing correctly post-divorce.
📞 Need Help? Let Jacobson Family Law Guide You
At Jacobson Family Law, we help clients approach divorce with clarity and confidence—including understanding how their divorce will impact their taxes. We work with trusted financial professionals to ensure you make informed decisions that protect your future.
Schedule a consultation today by calling 443-741-1147 or clicking here to contact us.
