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Divorce and Taxes: What Impacts You?


Divorce impacts absolutely everything about your life, so the fact that it impacts your tax situation is no surprise.

 

There are 4 major ways your tax return is impacted by divorce:


  • Filing status – If your divorce is final by December 31st, your filing status will be either Single or Head of Household.  It does not matter if you were married the majority of the year, it depends on what your marital status is the final day of the year. Filing Head of Household is for those individuals with dependents.

  • Standard Deduction – The standard deduction is a specific dollar amount, set by the IRS. reducing the amount of income on which you're taxed.  Your standard deduction amount is based on your filing status.  The larger the standard deduction, the lower your taxable income is, and the less taxes you pay.

  • Deductions & Credits – The place we see this most is when children are involved.  The custody agreement normally dictates who claims the children.  It could be each spouse claims one child or one spouse claims all of the children.  The person claiming the children, will receive the child tax credit.  Currently, for 2025 this is $2000 for dependents under the age of 17 and $500 for those above.

    • Keep in mind, if you have college age children you can only claim the Education Credit if you are claiming the child.

    • If you are claiming the kids on your tax return, there is a very large impact on your tax situation!

  • Tax Brackets – We have a progressive tax system, which means a portion of your taxable income is taxed at 10% and then the next portion of income is taxed at 12% and so on. The amount of income that falls into each of those tax brackets changes with your filing status.

    • For example, if you are filing as Single, the income amount taxed at 10% is $11,925 for 2025. If you are filing as Head of Household, the income amount taxed at 10% is $17,000. This is almost a $5000 difference! We aren't talking pennies, we're talking thousands of dollars!

 

This only skims the surface of ways divorce impacts your tax return. We encourage you to speak to a tax professional on how divorce impacts you specifically.


We know all of this can be confusing and stressful.


That’s why we’ve made it our mission to help you unravel it all.

From confusion to clarity, Accountabilities has you covered.

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