The short answer: Divorce changes your filing status, who claims the children, and how alimony and property are taxed. The IRS looks at your marital status on December 31 to decide how you file for the whole year. For divorces finalized after 2018, alimony isn’t deductible or taxable, and most property transfers between spouses aren’t taxed at the time of transfer, though taxes may arise later.
Divorce reshapes nearly every corner of your financial life. Taxes are easy to miss until filing season rolls around. If you’re going through a divorce in Greenville, getting a handle on the tax side now can save you from unpleasant surprises during your settlement. Here’s what South Carolina families should know about filing taxes after divorce.
Here’s what we cover below:
-How your filing status changes the year your divorce is final
-Who claims the children on taxes after divorce
-How alimony is taxed after divorce
-How property division is handled for taxes
-Why you need both a family law attorney and a tax professional
How does your filing status change the year your divorce is final?
Your filing status for the whole year relies on your marital status on the last day of that year. Under federal law, whether an individual is married is determined as of the close of the tax year (26 U.S.C. § 7703), which for most people means December 31.
If your divorce is final by December 31, the IRS treats you as unmarried for the entire year, so you’ll typically file as single or head of household. If it isn’t, you’re still considered married, and you can file jointly or separately. That one date can shift your tax bracket, your deductions, and your refund, so timing matters more than most people expect.
Who claims the children on taxes after divorce?
The parent the children live with most nights usually has the right to claim them. Under IRS rules, the custodial parent, meaning the parent with whom the child resides for the greater number of nights during the calendar year (26 CFR § 1.152-4), generally has the right to claim the children as dependents under the special rule in 26 U.S.C. § 152(e).
The custodial parent can release that claim by signing Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Settlement agreements and court orders often determine who has custody of the children, sometimes on an alternating-year basis. One catch: a court order, decree, or separation agreement may not serve as that written release. The custodial parent must sign the form, so spell this out in your agreement.
Call 864-778-2734 to talk through your options.
How is alimony taxed after divorce?
For divorces finalized after December 31, 2018, alimony isn’t deductible by the paying spouse and isn’t taxable income to the receiving spouse. The Tax Cuts and Jobs Act repealed the deduction for alimony payments and the corresponding inclusion of those payments in the recipient’s income. Put simply, alimony under agreements executed after December 31, 2018, is neither deductible by the paying ex-spouse nor taxable to the recipient. If your divorce was finalized before 2019, the older rules may still apply.
How is property division handled for taxes?
Dividing property in a divorce usually isn’t a taxable event when the transfer actually happens. Under Section 1041, no gain or loss is recognized on a transfer of property to a spouse or former spouse when the transfer is incident to a divorce. South Carolina is an equitable distribution state, so marital property gets divided fairly, though not always equally.
The tax usually shows up later. The spouse who receives the property takes the transferor’s adjusted basis in it. In plain terms, you inherit its built-in tax history. Two assets worth the same today can trigger very different tax bills down the road.
Wondering how this affects your assets? Call 864-778-2734.
Why you need both a family law attorney and a tax professional
Divorce sits at the intersection of family law and tax law. The best approach usually pulls in both a family law attorney and a qualified tax professional. Our team at Turner Family Law structures settlements with these tax issues in mind, and your tax advisor handles the filing details. This article is general information, not tax advice, so check your situation with a professional.
Frequently asked questions about filing taxes after divorce
Can my ex and I both claim our child in the same year?
No. Only one parent can claim a child as a dependent in a given year. The custodial parent claims by default unless they sign Form 8332 releasing that claim.
If I sign Form 8332, do I lose every child-related tax benefit?
No. After releasing the dependency claim, the custodial parent generally retains benefits such as head-of-household filing status, the earned income tax credit, and the child and dependent care credit. A tax professional can confirm what applies to you.
Is child support taxable in South Carolina?
Generally, no. Child support isn’t taxable to the parent who receives it or deductible by the parent who pays it. It’s treated differently from alimony, which is one more reason to have your agreement reviewed.
Protect what matters most
Divorce is complicated, and the tax effects can trail you for years. Our team at Turner Family Law helps clients across Upstate South Carolina from our offices at 12 E Stone Ave in Greenville and 2254 Celanese Rd in Rock Hill. Ready to move forward? Contact us at 864-778-2734 to discuss your options.
