Alimony, Dependents and Tax Reform—What Divorced Taxpayers Need to Know

Filing your taxes as a divorcee is pretty straightforward—for starters, no matter what time of year you got a divorce, you can file as single for the year.

Your taxes will be separate from your ex-spouse’s, and if you have any qualifying dependents, you can file as head of household, which boosts your tax savings even more than the single filing status.

So what about tax reform? And who gets to claim the dependent?

Who claims the child as a dependent?

It’s common for the custodial parent—the one who spends more than half the year with the child—to claim the dependent. It all comes down to the child’s actual support. The noncustodial parent may claim the dependent if he or she provided at least half of the child’s support during the year.

The noncustodial parent may also claim the dependent if a divorce or separation decree or a written declaration from the custodial parent says the noncustodial parent can claim the dependent.

If there’s any doubt about who will claim the child, it’s best to communicate with the other parent before you both file. When both parents claim the child, only the first filed return will be accepted—check out the Tax Guide for more info on claiming children when divorced.

So what about alimony? Does that work the same way? Well, let’s see.

The alimony switch: Coming to tax returns near you in 2020

Divorces during or before 2018 will be treated under the old law—so when you file your taxes in 2019, alimony payments can be deducted by the payer and the recipient is taxed on that amount. To deduct alimony payments under the old law, the payments must meet these criteria:

• The payment is by cash, check or money order.
• You and your spouse don’t live in the same home.
• You don’t count payments made after your ex dies or remarries, since you’re not obligated to pay those.
• The payment is not for child support.

If you receive alimony under the old law, you must report the payments as income on your taxes, and you must give your ex-spouse your SSN in order to properly deduct the payments.

Quick heads-up about divorces in 2019 and beyond: Alimony payments will not be deductible, and the recipient won’t be taxed on those amounts, which is a significant change from the current tax law (and an expensive one for those paying alimony).

These changes also apply to divorce instruments modified after December 31, 2018, if the modification specifically states that it will implement the Tax Cuts and Jobs Act treatment of alimony payments.

No matter your tax situation, 1040.com makes it a breeze—we’ll ask you easy questions and use your answers to find your tax breaks in the background. Sign in and get started for smart, simple filing!