It might surprise you to read, that about 50% of Americans divorce. That is reportedly the sixth-highest rate in the world. We’ve seen a number of these divorces play out on Wall Street last year. Last year, Microsoft ( (MSFT) – Get Microsoft Corporation Report) co-founder Bill Gates and his wife Melinda finalized their divorce.
For those recently divorced, like the Gates, tax experts warn there are a lot of tax considerations from alimony to claiming dependents. TheStreet’s Tracy Byrnes spoke with Lisa Greene-Lewis, CPA and Expert for TurboTax, explaining the basics for recently divorced couples. Watch the video above.
Tax Tips Recently Divorced:Understand your filing statusChild support has tax implicationsClaim Head of Household if You Have a ChildJoint Custody? Only one parent can claim dependentsIf your mailing address changes, you must notify the IRS.Our TurboTax Live experts look out for you. Expert help your way: get help as you go, or hand your taxes off. You can talk live to tax experts online for unlimited answers and advice OR, have a dedicated tax expert do your taxes for you, so you can be confident in your tax return. Enjoy up to an additional $20 off when you get started with TurboTax Live.
Recommended Read: Tax Tips for Gray Divorce (Divorced and Retired)
Video Transcript:Tracy Byrnes: A lot of people got divorced in 2021. And hey, here’s to new beginnings, but what happens with your tax return now? So if I got divorced in July or December, what am I on my tax return? Lisa Greene-Lewis, CPA and Turbotax expert, is here with us right now. So, Lisa, I got divorced last year. How do I file my tax return?
Lisa Greene-Lewis: Yes, so no matter if you were divorced in July or on December 31, 2021, you are considered single, so you would file as a single person. And so you may see a difference in– for instance, if you claim the standard deduction, you would have a standard deduction of $12,550, as opposed to $25,100 if you file married, filing jointly. On the bright side, if you support a dependent, you would be able to claim head of household. And you would see more standard deductions.
Tracy Byrnes: Yeah, you get more benefit as head of household because, let’s face it, you do a little bit more work. You’re taking care of people. You’re running a house by yourself, so you do get extra benefits from it.
But really important, I think, to emphasize that your status on December 31st is your status for the entire year. Regardless of whether you got divorced at the beginning of the year or the end, you’re still single. You’re still on your own, kid. Right?
Lisa Greene-Lewis: Right. And one thing I would point out, too, if you do have kids, discuss who is going to claim the child on their taxes because only one person is able to claim a dependent. So that’s one important discussion I always say to have.
Tracy Byrnes: The huge one and a lot of couples take turns each year, and stuff, but definitely something to speak to the attorneys about.
Lisa Greene-Lewis, thank you so much for explaining all that.
Lisa Greene-Lewis: Thank you for having me.
Editor’s note: Video produced by TheStreet’s Zach Faulds