Divorce and separation: the tax rules that matter

Filing status in the year of divorce

If your divorce is final by December 31, you file as single, or head of household if you qualify, for the whole year. If it isn't final yet, you're still married and choose married filing jointly or separately, unless you qualify as head of household because you lived apart for the last 6 months of the year. See Am I married for tax purposes?

Who claims the children

• The custodial parent, the one the child lived with for more nights during the year, generally claims the child.
• The custodial parent can let the other parent claim the child for the Child Tax Credit by signing Form 8332. The other parent attaches it to their return.
• Even with Form 8332, head of household status, the Earned Income Credit and the child care credit stay with the custodial parent.
• If both parents claim the same child, the IRS uses tiebreaker rules: the parent the child lived with longer, and if equal, the parent with the higher adjusted gross income.

Alimony

• Divorce or separation agreements signed after 2018: alimony isn't deductible by the payer and isn't income to the recipient.
• Agreements signed in 2018 or earlier: the old rules still apply. The payer deducts it and the recipient reports it as income, unless the agreement is later modified and the modification says the new rules apply.

Child support

Child support is never deductible by the parent who pays it and never taxable to the parent who receives it, no matter when the agreement was signed.

Selling the home

• Each person can exclude up to $250,000 of gain on the sale of a main home if they owned it and lived in it for at least 2 of the last 5 years. Married couples filing jointly can exclude up to $500,000.
• If you still own the home and your ex-spouse lives there under the divorce or separation agreement, that time can count as your own use.
• Transferring the home or other property to your spouse or ex-spouse as part of the divorce generally isn't a taxable sale.

Name changes

If you change your name, update it with the Social Security Administration before you file. The name on your return must match Social Security records, or the IRS can delay your refund.