How Getting Divorced Affects Your Tax Return

Matt Boyd is an assistant director of High-Net-Worth Tax Planning at Northwestern Mutual.

Going through a divorce is difficult for a lot of reasons. One of the most daunting realities is the task of untangling your finances from your former spouse. Depending on how long you were married and how intertwined your financial situation was, this can be a complicated and emotionally difficult experience. Initially, the biggest financial concerns typically center on things like a home, mortgage, retirement accounts and creating a new budget. But eventually tax season will come around.

When your marital status changes, filing your tax return can go from a straightforward process to a tricky situation—especially if kids are involved. Everyone’s experience is different, but addressing potential roadblocks as soon as possible can help. Here are some important questions you may want to review with a financial and tax professional about how divorce can impact your tax return.

Should you file jointly or separately?

In the year you get divorced or in the year a divorce is pending, one of the biggest questions you’ll need to answer is whether you will be filing jointly or separately.

The answer to this question depends in large part on whether you were legally married as of December 31 of the tax filing year. If you were married, you may either file “Married Filing Jointly” or “Married Filing Separately.” The joint filing option will tend to result in a lower combined tax, though not necessarily a lower tax for each person. Even if you do file separately, you will need to coordinate certain aspects. For example, if one spouse claims the standard deduction, the other spouse must also claim it, even if itemizing deductions would be more favorable for the other spouse. State law may also require that income is split evenly—even income that relates to one individual, such as wages.

If you were divorced as of December 31 of the tax filing year, then “Married Filing Jointly” is no longer a permitted filing status. Each spouse would need to either file as “Single,” or as “Head of Household.” The “Head of Household” filing status allows for a larger standard deduction and wider tax brackets as compared to the “Single” filing status. To qualify for “Head of Household,” the following must have applied during the tax filing year:

• You and your ex-spouse did not live together for the last six months of the year.
• You were responsible for more than half of the cost of maintaining your home.
• Your home was the primary residence of a qualifying dependent for at least half the year.

An unmarried individual who does not qualify for “Head of household” must file as “Single.”

Who claims the children as dependents?

If you’re divorced or separated, the custodial parent is often the one who will claim a child as a dependent. The custodial parent is the person who the child lived with the most during the tax filing year. For ex-spouses who split custody 50/50, this is the parent with the higher adjusted gross income. The noncustodial parent can still claim a child as a dependent if the other parent signs an IRS form agreeing to this arrangement.

In 2025, The ex-spouse who claims a child may be eligible for various tax breaks, including:

• The more favorable “Head of Household” filing status.
• A child tax credit of up to $2,000 per qualifying child.
• A dependent care credit of up to $3,000 for one child or up to $6,000 for two children.

Subject to qualification and to high-income phase-outs, claiming a child as a dependent can certainly provide a tax benefit, although the specific benefit may vary depending on which former spouse claims the child.

Will my tax rate change?

You may notice a change in your tax rate after getting divorced. That’s because income limits for each tax bracket are lower for “Single” filers. Let’s say, for example, that your taxable income is $100,000 in a given year, while your ex-spouse’s taxable income is $40,000. Filing jointly, as a married couple, would have resulted in an average federal tax rate of approximately 15 percent. But when filing as a single person after your divorce, your average federal tax rate would increase to approximately 17 percent—and your ex-spouse’s would decrease to approximately 11 percent.

Understanding the divorce agreement

Because a divorce has such a significant impact on taxes, many filing positions will be dictated by the divorce agreement. The divorce agreement may specify filing positions both while the divorce is pending and after the divorce is final. For example, the divorce agreement may state who will claim deductions like mortgage interest and real estate taxes, who will claim children as dependents on tax returns, and who will pay a tax liability or collect a tax refund. In many cases, these tax benefits will be split between ex-spouses, such as claiming a child as a dependent in alternating years, regardless of who was technically the custodial parent in each year. The attorneys will draft the divorce agreement to align with the applicable state laws to ensure there is not a disallowed split of tax attributes.

Depending on your situation, it may be necessary to delay filing a tax return, including filing an extension, until the divorce agreement is finalized. Once the divorce agreement is finalized, the tax returns should be prepared according to the terms of the agreement, so it’s usually a good idea to share the agreement with your CPA. If you and your ex double-claim certain tax benefits, you may end up in hot water with the IRS.

How is alimony taxed?

Alimony is paid by one divorcing spouse to the other divorcing spouse to provide ongoing support after the dissolution of the marriage. If you received alimony (sometimes called spousal support), you may or may not have to report the payment as income. For any divorce executed (or updated) in 2019 or later, you are not required to report this money as income on your tax return. What’s more, the person paying the alimony cannot write it off as a tax deduction. However, for divorces executed in 2018 or earlier, the opposite is true. The spouse that receives the money must report it as income, and the spouse that pays it can write it off.

How is child support taxed?

Child support is similar to alimony, but the payments are meant to support children. Child support payments are not considered taxable income and aren’t tax-deductible for the payer.

Can you count child support as income?

While child support isn’t counted as income for tax purposes, the parent who receives alimony and/or child support may choose to include it as income when applying for new financing. Mortgage lenders, for example, may factor these payments into your monthly earnings, which can improve your chances of getting approved. On the flip side, these payments will count as recurring debt for the person who makes the payments.

Filing your tax return can be complicated—even more so if you’re navigating a divorce. It’s a good idea to consult with a tax professional to fill in the blanks and confirm you’re doing things the right way. This is also a good time to make a new financial plan for yourself moving forward. Your Northwestern Mutual financial advisor can help you make sure you’re taking the right steps to set yourself up for financial success.

This article is not intended as legal or tax advice. Northwestern Mutual nor its financial representatives provide legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.