Few couples get divorced for tax purposes, but your marital status will likely affect your income tax return. You might owe more — or less — in taxes post-divorce.
Here are a few ways that getting divorced can affect your state and federal income taxes in Tennessee:
Head of household filing
You might qualify to file with head of household status after divorce, which would give you a larger standard deduction than what you might have qualified for while you were married. In fact, you may be able to file as head of household even if you are still technically married if you are “considered unmarried” by the IRS, i.e., you and your ex have lived apart for at least six months, and you paid the majority of your housing costs last year.
Claiming the children as dependents
The IRS only allows one parent to claim a child as a dependent on their taxes. If you and your ex have an even number of children, the IRS lets you each claim a child as a dependent. This is common practice among divorced and separated couples. But if you have an odd number of kids, one parent will get to claim more dependents than the other.
In a dispute over who gets to claim dependents, the IRS grants the right to the parent with whom the child spent the majority of the year. If the child divided their time exactly equally between their parents, the deduction goes to the parent with the highest adjusted gross income.
The new tax law
Keep in mind that the tax law that went into effect in January 2018 reduced the number of divorce-related deductions you can take. For example, you can no longer deduct spousal support payments.
The tax implications of your divorce settlement are something that your attorney should go over with you. An experienced divorce lawyer will also keep your future taxes in mind when negotiating your asset division.