Divorce can be emotionally and financially overwhelming, especially when it intersects with complex tax laws. In California- a community property state- how you file your taxes during and after a divorce matters. Understanding the right filing status, what's deductible, and how property division affects your return is crucial. This guide covers everything from how to file taxes after divorce to whether attorney fees are deductible.
Filing Status: Married, Separated, or Head of Household?
Your tax filing status affects your tax rate, eligibility for credits, and deductions. In California, your marital status on December 31 of the tax year determines how you can file.
| Marital Status on December 31 | Filing Options | Head of Household Eligibility | Notes |
|---|---|---|---|
| Divorced (Finalized by Dec 31) | - Single - Head of Household (if eligible) | Yes, if criteria met | You're legally considered unmarried for the entire year |
| Legally Separated (by court decree) | - Single - Head of Household (if eligible) | Yes, if criteria met | Treated the same as divorced for tax purposes |
| Married, Living Together | - Married Filing Jointly - Married Filing Separately | No | You must live apart for the last 6 months to qualify for HOH |
| Married, Living Separately (Not legally separated) | - Married Filing Jointly - Married Filing Separately | Yes, if all HOH criteria are met | You must have lived apart for the last 6 months and paid >50% of home costs |
| In Divorce Process, Not Finalized | - Married Filing Jointly - Married Filing Separately | Possibly, if you meet HOH criteria | Final decree date doesn't need to be Jan 1; Dec 31 determines status |
Filing While Legally Separated in California
California recognizes legal separation, which, unlike informal separation, involves a court order. If you are legally separated by court decree, the IRS allows you to file as Single or Head of Household, even though you are still technically married.
This is crucial for those exploring: "Should I file jointly or separately?" Filing separately might offer more control over liability but usually leads to a higher combined tax bill.
Should You File Jointly or Separately?
Couples in the midst of divorce often wonder: "Can I file taxes separate from my husband?" Yes—but weigh the pros and cons:
Advantages of Married Filing Separately:
- Shields you from your spouse's tax liability if they underreport income.
- Maintains independence if financial cooperation is difficult.
Disadvantages:
- You lose access to certain deductions and credits (e.g., Earned Income Credit, education credits).
- Usually results in a higher combined tax bill.
If trust or financial abuse is an issue, or you're worried about tax liability, filing separately may be the safer route.
How to File Taxes if Divorced Mid-Year
What if your divorce was finalized in July? In that case, the IRS considers you unmarried for the full year. You cannot file jointly. Your options are:
- Single (if you have no dependents).
- Head of Household (if you qualify).
This raises the common concern: "How to file taxes if divorced mid-year?" The answer depends on your marital status on December 31. Even if you were married for most of the year, your status is determined by the last day of the year.
Are Divorce Attorney Fees Tax Deductible?
This is a frequent source of confusion: "Are divorce attorney fees tax deductible?"
The short answer: No, not in most cases.
Per IRS and California tax law:
- Attorney's fees for obtaining a divorce or negotiating custody or property division are not deductible.
- However, legal fees paid for tax advice related to the divorce or for obtaining taxable spousal support may be partially deductible. Keep good records and ask your tax preparer.
- Legal fees for tax advice may be deductible if they exceed 2% of your adjusted gross income and are not disallowed under current itemized deduction limits (note: these were suspended through 2025 by the Tax Cuts and Jobs Act).
Spousal Support vs. Child Support: Tax Implications
Spousal Support Payments (Alimony):
- For divorces finalized before January 1, 2019:
Note: Modifications made after January 1, 2019, are also subject to the new tax rules if the modification expressly states that the Tax Cuts and Jobs Act treatment applies.
- Deductible by the paying spouse.
- Taxable to the recipient.
- For divorces finalized after that date (due to the Tax Cuts and Jobs Act):
- Not deductible by the payer.
- Not taxable to the recipient.
Child Support Payments are:
- Not deductible by the paying parent.
- Not considered income for the receiving parent.
Understanding this tax treatment is crucial when calculating post-divorce finances.
Property Division and Capital Gains Taxes
In California, property acquired during marriage is generally community property, and each spouse owns 50%.
During a divorce:
- Transfers of property between spouses are not taxable at the time of transfer.
- However, future capital gains taxes may apply.
Example: If one spouse keeps the family home and later sells it, they may face capital gains on the entire appreciation (unless they qualify for the $250,000 home sale exclusion).
So while a divorce settlement may seem equal on paper, future tax liability can make one side bear more of the cost.
Claiming Children After Divorce: Who Is Entitled?
Who gets to claim the child on taxes?
By default, the custodial parent (who the child lives with most of the year) gets to claim:
- Child Tax Credit
- Earned Income Tax Credit (EITC)
- Head of Household status
However, the noncustodial parent can claim the child only if:
- The custodial parent signs IRS Form 8332.
- The divorce decree alone isn't enough without the signed form.
This creates friction in many cases. If you're wondering, "Can I claim the child if I only have weekend visits?" - the answer is no, not unless the custodial parent officially gives up the claim.
Tax Return Disclosures and Divorce Proceedings
In California, during divorce or legal separation, both parties are required to exchange financial disclosures. This includes:
- Income and expenses
- Assets and debts
- Past two years of tax returns
These are essential for fair property division and spousal support calculation. Hiding income or failing to disclose tax records can result in court sanctions and delayed settlements.
The court also uses this data to determine:
- Ability to pay support
- Ownership of income-generating assets
- Entitlement to specific tax deductions or credits
Retirement Accounts and Divorce
Retirement accounts- like 401(k)s or IRAs- are often the largest assets divided in a divorce settlement.
Key tax-related considerations include:
- Transfers under a Qualified Domestic Relations Order (QDRO) are not taxable.
- However, if funds are withdrawn outside of a QDRO or rolled improperly, the recipient may face income tax and early withdrawal penalties.
Always consult both a family law attorney and a tax professional before splitting retirement accounts.
FAQs
You can amend within 3 years, but both spouses must agree and sign the amendment.
File your return claiming the child and attach Form 8332. The IRS will investigate and may require both parents to submit proof.
Yes, they're considered community property if accrued during the marriage. The court may order it divided or assigned to one spouse.
Yes, but it may create tax consequences. It's not advisable without legal and tax guidance.
Get Help Early
The intersection of divorce and tax laws in California is complex. From choosing the correct filing status to understanding property division and spousal support tax treatment, every decision has long-term consequences.
To minimize surprises:
- Work with a divorce lawyer and tax professional together.
- Review IRS and California tax board resources.
- Plan your filing status carefully each year.
Divorce is a major life event—but with proper planning, you can navigate both emotional and financial recovery while staying compliant with tax laws.