Change in Marital Status and Its Impact on Taxes

mariadrg2021
Sep 8
2 min read

Life changes don’t just affect daily routines—they also impact your tax situation. One of the most important is a change in marital status, such as a legal separation or divorce. Understanding how these events affect your tax return is essential to avoid errors and potential IRS penalties.

When Does the IRS Consider a Couple Married?

The IRS determines marital status for tax purposes as of the last day of the tax year (December 31). This means:

If a couple is legally married on December 31, they are considered married for the entire tax year.
If there is a final divorce decree or legal separation order before that date, the taxpayers are no longer considered married.

In other words, even if a couple has been separated most of the year, they are still considered married for tax purposes until the court issues a final decree.

Filing Options After Divorce or Separation

Once divorce or legal separation is official, taxpayers may have different filing status options:

Single: available for those who do not qualify for other filing statuses.
Head of Household: available if the taxpayer maintains a home for a qualifying dependent and meets certain requirements.
Married Filing Separately: available when the marriage is still legally valid, but each spouse files their own return.

Choosing the correct filing status can directly affect how much tax you owe or the refund you may receive.

Updating Tax Withholding

After a divorce or separation, it is essential to update your information with your employer. To do this, the taxpayer must complete a new Form W-4, Employee’s Withholding Certificate.

This ensures that paycheck withholdings reflect the new tax situation.
It prevents unpleasant surprises at tax time, such as owing additional taxes to the IRS.

Other Considerations

Dependents: deciding who will claim children or other dependents can significantly impact tax credits such as the Child Tax Credit or the Earned Income Tax Credit.
Alimony payments: reporting and deductibility rules changed with the 2019 tax reform. In most cases, for divorces finalized after December 31, 2018, alimony payments are not deductible for the payer and are not taxable for the recipient.
Assets and property: if property is sold during the separation process, it is important to consider potential capital gains taxes.

Conclusion

A change in marital status is more than a personal decision; it also carries tax consequences that must be carefully managed. Keeping your information up to date with the IRS and your employer is key to avoiding errors and maximizing benefits.

At MDR Tax Filing, we provide bilingual guidance in English and Spanish to help you make the best tax decisions during times of personal change. Our team supports you step by step so you can stay compliant and protect your financial peace of mind.

📞 813-522-9745 | 813-403-1724 🌐 www.mdrtaxfiling.com