Basic Tax Questions for Divorcing Parties Answered

Divorcing couples always have at least basic questions about the impact of divorce on their taxes and their tax status.

Tax status:
Everything depends on whether your divorce was final on December 31st of the tax year in question. If it was, you can file as single. If it wasn’t, you can file jointly or as married, filing separately.

Although married couples filing joint returns receive more favorable tax treatment, each joint filer will generally be responsible for the couple’s entire tax liability.

Child Dependency Exemption:
This generally goes to the custodial parent, although it can be negotiated away to the non-custodial permanently or in alternating years. A special IRS form must be signed by the custodial parent if the exemption is being bargained away.

Dependent Child Care Tax Credit and Earned Income Credit:
These go to the custodial parent and that is not negotiable.

Education Tax Credits:
These go to the parent who has the dependency tax exemption.

Read more in this [Lancaster, PA] Intelligencer Journal article: Tax issues in divorce and separation – Taxing matters.