Filing Taxes After Divorce In Maryland: Changes in Filing Status and Maryland State Tax After a Divorce

Disclaimer: The attorneys at The Law Office of Shelly M. Ingram are not accountants or tax professionals, and cannot offer tax advice. Please consult a qualified tax professional for assistance with your specific situation.

Almost nobody enjoys going through divorce. Likewise, most people dread preparing and filing their taxes. Unfortunately, many people have to do both. If you are one of these people, you may quickly realize that filing taxes after divorce, or even during the process, involves unexpected challenges.

This is especially true if your former spouse took charge of tax filing. But even if you have always prepared your own taxes, you may have questions about the financial consequences of divorce and how to file taxes after divorce.

How do I file taxes if I am married, but separated?

If you are still legally married as of December 31 of the tax year, even if you have been separated from your spouse, you are still married in the eyes of the IRS for purposes of filing taxes for that year. You and your spouse can still file “married filing jointly,” if you wish; that filing status may offer you the most favorable results. If you do not wish to file a joint return, you can file as “single,” or “head of household,” if you qualify.

When are my spouse and I considered no longer married for tax purposes?

Your marital status as of December 31 is what matters. If your divorce is final as of December 31, you cannot file your income taxes as either “married filing jointly” or “married filing separately” for that tax year, even if you were married for nearly the entire year. If you qualify, you may file as “head of household;” if not, you must use the “single” filing status.

How do I know if I qualify to use the “Head of Household” tax filing status?

Filing as head of household offers better tax benefits than filing as “single,” but you must meet certain criteria to qualify for this status. In order to be considered “head of household” for tax purposes, you must:

• Be unmarried or legally separated as of December 31 (note: there is no “legal separation” in Maryland)
• Pay more than half the cost of maintaining a home
• Have a dependent child (or other dependent) living with you for more than half the year

Speak to your divorce attorney or tax preparer to see if you are eligible for head of household status.

How do I amend a joint-filed tax return after divorce?

It’s not uncommon to make an error when filing your taxes, which is why the IRS provides an avenue (Form 1040-X) to amend previously-filed tax returns. How to amend a joint-filed tax return depends on the nature of the need for amendment. For instance, you may have incorrectly recorded your income or your tax deduction or credits, or may have inadvertently filed using the wrong status.

You and your ex-spouse will both need to sign Form 1040-X unless you have authority to file it alone, such as if you are only amending your own information. If the amendment will change the income, deductions, or tax liability for both of you, you will probably both need to sign.

If your spouse refuses to sign, consult your divorce attorney for next steps.

Who gets to claim our child on their tax return after a divorce?

Only one divorced parent can claim a child on their tax return. The IRS gives a parent with whom a child lived for more than half the year the right to claim the child as a dependent. However, if the custodial parent wishes, they can release this right to the other parent using IRS Form 8332. Even if the divorce settlement grants the non-custodial parent the right to claim the child, the IRS still requires the custodial parent to complete and sign this form.

If the child spends time with both parents equally, the parent with the higher adjusted gross income (AGI) has the right to claim the child absent an agreement or court order that states otherwise.

Do I have to pay tax on my divorce settlement?

As a general rule, the IRS does not require former spouses to pay tax on property transfers between them that are “incident to a divorce.” Transfers are usually assumed to be “incident to a divorce” if they are part of the terms of the divorce settlement, or happen within a year of the marriage’s end. However, you may find that you owe capital gains tax if you liquidate assets from your property settlement that have appreciated in value since you and your spouse acquired them.

Can I deduct alimony or child support payments made to a former spouse?

Prior to 2019, alimony was considered taxable income to the recipient, and payments were tax-deductible for the person making the payment. That is no longer true. Alimony is not taxable to the recipient nor deductible to the payor. Similarly, child support is not considered income to the parent receiving it, and cannot be deducted from income by the parent paying it. Parents are obligated to support their children whether or not the child lives with them all the time, so that makes sense.

Work with an Experienced Maryland Divorce Attorney

If you have questions about how to file taxes after divorce, you don’t have to figure it out alone. At the Law Office of Shelly M. Ingram, our divorce attorneys understand the complexities of tax and divorce. To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (301) 658-7354 or contact us online.