Understanding the Tax Implications of Divorce

Divorce impacts many aspects of your life—including your tax obligations. From filing status changes to child tax credits and alimony payments, it is essential to understand how your post-divorce finances will be affected.

At G. Best Husband Law, PLLC, we help clients in Virginia and Washington, D.C. navigate the financial complexities of divorce, ensuring they make informed decisions that protect their financial future.

Disclaimer: We are not tax professionals, and this article should not be construed as tax advice. Always consult with a qualified tax advisor or accountant regarding your specific tax situation.

1. Filing Taxes After Divorce: What You Need to Know

How Does Divorce Affect Your Filing Status?

Your marital status as of December 31, 2025, determines how you file your taxes for the year. Here are your options:

• Single – If your divorce was finalized by the last day of the year, you must file as Single or Head of Household (if eligible).
• Head of Household (HOH) – You may qualify for this status if:
  • You paid more than half the cost of maintaining your home.
  • Your child lived with you for more than half the year.
•  Married Filing Jointly/Separately – If your divorce is not finalized by December 31, you can still file jointly or separately as a married couple.

📝 Pro Tip: Filing as Head of Household can lead to lower tax rates and a higher standard deduction.

2. Who Claims the Child Tax Credit After Divorce?

Determining Who Can Claim the Credit

The child tax credit (CTC) is a valuable benefit for parents, but only one parent can claim it per tax year. Generally, the custodial parent (the parent the child lives with for more than 50% of the year) gets to claim the credit.

However, parents can agree in their divorce settlement that the noncustodial parent may claim the credit by using IRS Form 8332.

🔹 Key Considerations:

• If you share equal custody, the IRS typically allows the parent with the higher adjusted gross income (AGI) to claim the credit.
• Falsely claiming the child tax credit can lead to IRS audits and penalties.

💡 Need help negotiating tax credits in your divorce agreement? An experienced family law attorney can ensure you maximize financial benefits.

3. Alimony & Taxes: What You Need to Know

Is Alimony Tax-Deductible?

For Divorces Finalized Before January 1, 2019:

• Paying spouse: Alimony is deductible from taxable income.
• Receiving spouse: Alimony must be reported as taxable income.

 For Divorces Finalized On or After January 1, 2019:

• Paying spouse: Alimony is NOT tax-deductible.
• Receiving spouse: Alimony payments are not considered taxable income.

Why Does This Matter? If you are negotiating alimony in your divorce, understanding these tax changes is crucial.

💡 Pro Tip: Work with a divorce attorney to structure alimony payments in a tax-efficient way.

4. Splitting Assets & Tax Considerations

Dividing Retirement Accounts

During divorce, retirement assets such as 401(k)s, IRAs, and pensions may need to be divided.

Key Tax Considerations:

• 401(k) & Pension Plans – Use a Qualified Domestic Relations Order (QDRO) to avoid tax penalties when dividing funds.
• IRA Accounts – Transfers incident to divorce are not taxable if handled correctly.

Capital Gains Taxes on Property Division

If you sell the marital home, you may be subject to capital gains tax unless you qualify for the home sale exclusion.

📝 Pro Tip: Selling assets after divorce can trigger unexpected tax liabilities—consult a family law attorney before finalizing property division.

5. Common Divorce Tax Mistakes to Avoid

✔ Forgetting to Update Your W-4 – Adjust your tax withholding to reflect your new filing status.
✔ Miscalculating Child Tax Credits – Ensure the correct parent claims the credit per your custody agreement.
✔ Overlooking Retirement Account Taxes – Incorrectly withdrawing funds from a 401(k) without a QDRO can result inearly withdrawal penalties.
✔ Not Factoring in Alimony Changes – The tax treatment of alimony has changed—ensure your payments are structured properly.

Need Help Navigating Divorce & Taxes?

Divorce is stressful enough without worrying about tax penalties. At G. Best Husband Law, PLLC, we work closely with financial professionals and tax experts to ensure our clients make informed, financially sound decisions.

📩 Contact us today to schedule a consultation and protect your financial future.

Disclaimer: We are not tax professionals, and this article should not be construed as tax advice. Always consult with a qualified tax advisor or accountant regarding your specific tax situation.

Final Thoughts

Understanding the tax consequences of divorce can save you money and prevent unexpected issues down the road. Whether you are negotiating custody, alimony, or property division, having a skilled family law attorney on your side is essential.

📞 Need legal advice? Call G. Best Husband Law, PLLC at 844-640-6100 today.