A divorce can mean new beginnings. It can also mean new tax implications. CPA and TurboTax tax expert Lisa Greene-Lewis has the divorcee’s guide to filing taxes in 2022.

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Video Transcript ~ Title : Taxes & Divorce: Here’s What to Know – Presented By TheStreet + TurboTax
– [MUSIC PLAYING] TRACY BYRNES: A lot of people got divorced in 2021. And hey, here’s to new beginnings. But what happens with your tax return now? So if I got divorced in July or December, what am I on my tax return? Lisa-Greene Lewis, CPA and TurboTax expert is here with us right now. So Lisa, I got divorced last year, how do I file my tax return? LISA GREENE-LEWIS: Yes, so no matter if you were divorced in July or on December 31st, 2021, you are considered single. So you would file as a single person. And so you may see a difference in– for instance, if you claim the standard deduction, you would have a standard deduction of $12,550 as opposed to $25,100 if you file married filing jointly. On the bright side, if you support a dependent, you would be able to claim head of household, and you would see more standard deduction. TRACY BYRNES: Yeah, you get more benefit as head of household. Because let’s face it, you do a little bit more work, you’re taking care of people, you’re running a house by yourself, so you do get extra benefit from it. But really important, I think, to emphasize that your status on December 31 is your status for the entire year regardless of whether you got divorced in the beginning of the year or the end, you’re still single, you’re still on your own, kid, right. LISA GREENE-LEWIS: Right. And one thing I would point out too, if you do have kids, discuss who is going to claim the child on their taxes. Because only one person is able to claim a dependent. So that’s one important discussion I always say to have. TRACY BYRNES: The huge one, a lot of couples take turns each year and stuff. But definitely something to speak to the attorneys about. Lisa Greene-Lewis, thank you so much for explaining all that. LISA GREENE-LEWIS: Thank you for having me. [MUSIC PLAYING]
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Divorce can be a tough and emotionally draining process, but it’s important to also consider the financial implications that come with it. One major aspect that often gets overlooked is the impact that divorce can have on your taxes. To help guide you through this complicated issue, TheStreet has partnered with TurboTax to provide some key information on what to know about taxes and divorce.

One of the first things to consider is your filing status. Your marital status as of December 31 of each tax year determines how you file your taxes for that year. If you were divorced by December 31, you will need to file as single or head of household. This can have a significant impact on your tax bracket and the amount of taxes you owe.

Another important consideration is how to handle any assets that are divided during the divorce process. Transferring assets between spouses as part of a divorce settlement is generally tax-free. However, it’s important to be aware of the tax implications of selling assets or transferring retirement accounts, as these actions may trigger taxes or penalties.

If you have children, it’s also important to consider how divorce can impact your tax situation. Custody arrangements often determine who can claim the children as dependents for tax purposes. It’s important to properly document any custody agreements to avoid any disputes with your ex-spouse or the IRS.

Additionally, alimony payments can also have tax implications. If you receive alimony, it is considered taxable income. On the flip side, if you pay alimony, you may be able to deduct those payments from your taxable income. However, there are specific rules and requirements that must be met in order to qualify for this deduction.

It’s always a good idea to consult with a tax professional or financial advisor when going through a divorce. They can help you understand the tax implications of your divorce settlement and ensure that you are in compliance with all tax laws.

In conclusion, taxes and divorce are often intertwined, and it’s important to be aware of how your marital status and financial arrangements can impact your tax situation. By staying informed and seeking professional advice, you can navigate this complex issue and ensure that you are fulfilling your tax obligations during and after divorce.