Divorce in Maryland can affect every aspect of your life and financial situation, including your tax obligations. You probably filed a joint return during your marriage and enjoyed some tax advantages, but after divorce, you must file separate returns. You will no longer be able to claim the standard deduction for married couples filing jointly or take advantage of other tax benefits afforded to married couples.
IRS rules for divorce
The IRS still considers you married to your spouse until the last day of the tax year, December 31st. This means that you must report any income you earn before the divorce is final on your joint tax return. However, after the divorce is finalized, you will need to file separate returns for the rest of the year and going forward.
Filing as a head of household (HOH)
In some cases, you may be able to file as head of the household to take advantage of the tax benefits associated with it. To do this, you must have maintained your primary residence for at least six months (the entire year in most cases) and paid more than half of the household expenses from July 1st through June 30th of that same year. Additionally, there must not have been another HOH claiming a dependent in that same period.
Tax credits and deductions after divorce
Depending on your individual circumstances, you may be eligible for certain tax credits and deductions after your divorce. For example, if you are the custodial parent and pay more than half the costs of raising your children, you can claim a child tax credit. Additionally, you may be able to deduct certain legal fees associated with your divorce as well as medical expenses for yourself or your children.
Navigating taxes after divorce can seem complicated, but it’s important that you get it right to avoid any penalties or fines from the IRS. Some of the things to keep in mind during this process include filing status, dividable assets, deductions and credits.