Filing taxes after divorce involves several major changes that catch many people off guard. Understanding the tax implications of divorce — from your filing status to capital gains on the family home to Form 8332 for the child tax exemption — helps you avoid costly mistakes in the year of and years after your divorce.
Filing Status After Divorce
Filing taxes after divorce: your marital status on December 31 determines your filing status for the entire year. If your divorce was final on December 31, you file as Single (or Head of Household if you qualify) for that entire tax year — even if you were married for 364 days. Head of household divorce california: you qualify for Head of Household status if you were unmarried (or legally separated) on December 31, paid more than half the cost of keeping up a home, and a qualifying child lived with you for more than half the year. Head of household provides a higher standard deduction than Single filing status.
Capital Gains Divorce California
Capital gains divorce california: transfers of property between divorcing spouses incident to divorce are generally not taxable events (IRC section 1041). However, when you later sell the property, capital gains are calculated based on the original cost basis — not the value at the time of transfer. The home sale exclusion ($250,000 per person, $500,000 for married couples filing jointly) may be reduced if one spouse no longer lives in the home as a principal residence for 2 of the 5 years before sale.
Form 8332 and Child Tax Benefits
Form 8332 divorce: the custodial parent can release the dependency exemption and child tax credit to the non-custodial parent by signing IRS Form 8332 each year. Without a signed Form 8332, the custodial parent (the parent with more overnights) claims the child tax credit by default. Divorce decrees should specify who claims the child each year — but the IRS follows Form 8332, not the divorce decree. Name change after divorce taxes: if you change your name after divorce, notify the Social Security Administration first — the IRS matches tax returns to SSA records, and a name mismatch can delay your refund. Furubotten Law, APC advises on the tax aspects of divorce settlements throughout Orange County and Riverside County. Call (714) 795-3862 for a complimentary case evaluation.