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Divorce and Federal Taxes: Filing Status

Filing StatusGenerally speaking there are four filing statuses available when you file your federal income taxes: Single, Married Filing Jointly, Married Filing Separately, and Head of Household. Normally, it is pretty easy to decide what filing status you should use. When you’re involved in a divorce case or after being divorced the decision regarding federal tax filing status can be more difficult. If you’re getting divorced in Illinois or were recently divorced in Illinois, keep the following rules for federal tax filing status in mind:

Single: In order to use the status of single, you must be unmarried or legally separated on the last day of the tax year. If you are married and in the process of being divorced, you cannot use single as your filing status.

Married Filing Jointly: In order to use this status, you must be married on the last day of the tax year. In addition, both parties must agree to file jointly. (See my article regarding an Illinois court’s authority to order you to file taxes jointly.) If two parties file a joint return, they are jointly and separately liable for the entire tax unless the IRS later approves a request for innocent spouse relief.

Married Filing Separately: If you are married at the end of the year and you do not qualify for head of household status and do not file a joint return with your spouse, you must use the married filing separately filing status. If you file in this way there are several disadvantages. You cannot take the child and dependent care credit. You cannot take the earned income credit. You cannot take the adoption credit. You cannot take any education credits. If you or your spouse itemize deductions, then both must itemize deductions. As a result, using this filing status usually results in a significantly higher total tax bill.

Head of Household: In order to use this status you must be considered unmarried at the end of the year, provide more than half the cost of keeping up a home, and have a qualifying person residing with you. Your child for whom you have custody is usually a qualifying person. There is a special rule that will allow you to use head of household status even if you are married as long as your spouse did not reside with you during the last six months of the year. However, you must also be able to claim a child as an exemption even if you ultimately release the exemption under other special rules.

Bringing it back to the most basic level, absent unusual circumstances, after a divorce the custodial parent would qualify for head of household status regardless of whether they claim the child as a dependent, as long as they could claim the child as a dependent. The non-custodial parent will not qualify for head of household status even if they can claim the child as a dependent under special rules for divorced parents. During a divorce, the same rules would apply as long as the parties did not reside together during the second half of the year.