Doing your income taxes is complicated enough as it is. But if you are recently divorced, you can expect your taxes to become more complicated, at least the first time you file. This is because your change in legal status can have considerable tax consequences, depending on the terms of your divorce.

The first major change is that if you were divorced at any point in the previous year, even if you got divorced on Dec. 31, you will be filing your income taxes separately. This is important because once a couple divorces, at least one spouse, if not both, is likely to find themselves in a lower tax bracket paying a lower marginal rate.

Another consideration is whether you can file as a head of the household. To qualify, you must be unmarried at year’s end, a qualifying person (someone who was financially dependent on you for more than half the year) must have lived in your home for more than half the year, and you have to have paid more than half the upkeep of the home. As a head of the household, you can claim a larger standard deduction than if you were filing individually, resulting in a bigger potential refund.

If you can claim a child as your dependent, you may realize additional tax benefits because you can claim an exemption for a dependent child. The ability to do so depends on your custody arrangement. If the child spends more nights with you over the course of the year, you are eligible. If not, you might still be able to claim the exemption if the custodial parent agrees to release their claim.

A major recent change, however, is Congress’s elimination of the spousal support exemption. Before 2019, a spouse paying alimony to their ex could claim the payments as a deduction from their taxable income, while the recipient spouse had to claim them as income. This is no longer the case. But if you were divorced before Dec. 31, 2018, and you were ordered to pay spousal support at the time, you can still take the deduction and your ex must still pay taxes on the income.

Perhaps the trickiest aspect of taxes post-divorce is the status of the marital home. If you sell the home and divide the proceeds, part of the proceeds could be subject to capital gains tax. Similarly, let’s say you buy out your spouse and remain in the marital home. But later you sell the home and make a profit. You may be taxed on the proceeds. On the other hand, if you stay in the marital home, you may be able to deduct the interest on your mortgage from your taxable income.

Of course, this is just a broad overview and there is a lot more to digest. To learn more, call Attorney Eric Schutzbank.