Divorce Financial Advisor

This is the first blog in the Divorce and Finances series, addressing common questions I hear as a Certified Divorce Financial Analyst during the pre- and post-divorce process. This blog will address how to handle tax filing after divorce. A podcast version of this blog series can be found on our resource center here.

What is my tax filing status after divorce?

Your tax filing status for the year is determined by your marital status as of the last day of the year.  If your divorce were effective December 1, 2021 you would no longer file jointly for 2021 and it would be the same as if you had been divorced effective January 1, 2021. Once divorced, you would either file either as Single or as Head of Household filing status depending upon certain criteria such as whether the children lived with you greater than 50% of the time.

What do you need to bring to your tax preparer after divorce?

When preparing to meet with your CPA, you will need to provide all your tax reporting data (W-2s 1099s, etc.) that contains your social security number on it. Due to the complexities involved in marital finances, it is often best for both spouses to agree to work with the CPA who previously prepared your joint tax returns in the first year of filing post-divorce. As accounts are renamed, assets are retitled and spouses move, continuing to use your previous CPA ensures all accounts and activity are considered and reduces the risk of information falling through the cracks. Issues related to changes in address or not updating accounts timely can lead to possible notices from tax authorities as well as potential penalties and interest.

Should you bring your divorce decree when you meet with your CPA?

Be sure to have your CPA review the tax section of your divorce decree in the first post-divorce year. The divorce decree usually includes language dictating who will claim any/all children as dependents. (Note: The Tax Cuts and Jobs Act (TCJA) has eliminated personal exemptions.) The decree could also specify who will claim future deductions related to the marital home as well as other possible deductions. This documentation helps to avoid any disputes between parties and confusion between tax preparers during tax time.  The document should also dictate how a tax liability should be handled for any open tax years where the parties still file jointly.

Should you review your withholdings with a CPA after your divorce?

If you are a W-2 employee, be sure that you review your current withholding with your CPA to determine if any changes need to be made. This would help to avoid any unexpected sizeable payment (or refund) on Tax Day.  Now that you are controlling your finances, you want to maintain control of all funds coming in and going out. Why let the government hold a sizeable overpayment of taxes all year?

Contact a divorce financial advisor at Round Table Wealth Management to assist in your pre- and post-divorce mediation.

For more relevant blogs on divorce finances, please check out the other articles in the series:

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