Divorce and taxes.

There is a second way to be unmarried for the whole year, which we left out of the passage above to keep it short. Publication 504's second bullet reads: "You have obtained a decree of annulment, which holds that no valid marriage ever existed. You must file amended returns (Form 1040-X, Amended U.S. Individual Income Tax Return) for all tax years affected by the annulment that aren’t closed by the statute of limitations for filing a return. Generally, for a credit or refund, you must file Form 1040-X within 3 years (including extensions) after the date you file your original return or within 2 years after the date you pay the tax, whichever is later. On the amended return, you will change your filing status to single or, if you meet certain requirements, head of household." And the exception attached to the first bullet reads: "Exception. If you and your spouse obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to remarry each other and do so in the next tax year, you and your spouse must file as married individuals." The "considered unmarried" test, quoted in full in the head of household entry below, is at Publication 504 under "Head of Household — Considered unmarried." The statute behind all of this is 26 U.S.C. s. 7703, "Determination of marital status," which says: "(1) the determination of whether an individual is married shall be made as of the close of his taxable year; except that if his spouse dies during his taxable year such determination shall be made as of the time of such death; and (2) an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married." Section 7703(b) carries the living-apart rule. Read at https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section7703&num=0&edition=prelim . Publication 504 also warns that if a couple divorces in one year purely to file as unmarried and intends to remarry, and does remarry the next year, they must still file as married individuals. The bullet marks in the passage quoted above stand for the bulleted list as it appears on the IRS page, and the bracketed ellipsis marks where we skipped from the "Unmarried persons" paragraph to the "Married persons" paragraph that follows it.

The 2025 standard deduction figures are read off Table 6, "Standard Deduction Chart for Most People," in Publication 501 for use in preparing 2025 returns. That table gives "Single or Married filing separately" as $15,750, "Married filing jointly or Qualifying surviving spouse" as $31,500, and "Head of household" as $23,625 (https://www.irs.gov/publications/p501). Those amounts are for tax year 2025 only and change every year. On the rate advantage, Publication 504 says of head of household: "Your tax rate will usually be lower than it is if you claim a filing status of single or married filing separately." We have not published bracket dollar thresholds here because Publication 504 does not state them. Publication 504 also says "Keeping up a home" costs include "rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home" and do not include "clothing, education, medical treatment, vacations, life insurance, or transportation." The statutory definition is at 26 U.S.C. s. 2(b). The bullet marks in the passage quoted above stand for the bulleted lists as they appear on the IRS page, and the bracketed ellipsis marks where we skipped from the "Requirements" list to the "Considered unmarried" list that follows it.

Publication 504 states the split of benefits again, plainly: "If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents (or parents who live apart) described earlier, only the noncustodial parent can claim the child tax credit or the credit for other dependents for the child. However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit." Publication 596, Earned Income Credit, for 2025 returns says the same of the earned income credit: "only the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC" (https://www.irs.gov/publications/p596). Form 8332 itself (Rev. December 2025) carries the note: "This form applies to certain tax benefits, including the child tax credit, additional child tax credit, and credit for other dependents" (https://www.irs.gov/pub/irs-pdf/f8332.pdf). On revoking, Publication 504 says: "For the revocation to be effective for 2025, the custodial parent must have given (or made reasonable efforts to give) written notice of the revocation to the noncustodial parent in 2024 or earlier." Part III of Form 8332 is used for that. The bracketed ellipses in the passage quoted above mark where we skipped between four separate paragraphs of Publication 504: "Custodial parent and noncustodial parent," "Equal number of nights," "Written declaration," and the caution note that follows it.

On tax owed, Publication 504 says: "If you’re divorced, you’re jointly and individually responsible for any tax, interest, and penalties due on a joint return for a tax year ending before your divorce. This responsibility applies even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns." The Instructions for Form 8857 put it the same way: "You remain jointly and severally liable for taxes, and the IRS can still collect them from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax" (https://www.irs.gov/instructions/i8857). There is a narrower rule for older orders: a decree that went into effect after 1984 and before 2009 can still substitute for Form 8332 if it states unconditionally that the noncustodial parent can claim the child, states that the custodial parent will not, and names the years — and the cover page, the pages carrying that information, and the signature page are all attached.

The IRS says the same thing in ordinary words in Publication 504 (2025) under "Joint and individual liability": "Both you and your spouse may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. This means that one spouse may be held liable for all the tax due even if all the income was earned by the other spouse." (https://www.irs.gov/publications/p504). Married filing separately is the alternative: "If you and your spouse file separately, you each are responsible only for the tax due on your own return" — but Publication 504 also warns that "in almost all instances, if you file separate returns, you will pay more combined federal tax than you would with a joint return," and lists the credits that filing separately shuts off, including the earned income credit unless you have a qualifying child.

The statute sets the deadlines. For innocent spouse relief, 26 U.S.C. s. 6015(b)(1)(E) requires that "the other individual elects (in such form as the Secretary may prescribe) the benefits of this subsection not later than the date which is 2 years after the date the Secretary has begun collection activities with respect to the individual making the election." For separation of liability, s. 6015(c)(3)(B): "An election under this subsection for any taxable year may be made at any time after a deficiency for such year is asserted but not later than 2 years after the date on which the Secretary has begun collection activities with respect to the individual making the election." Eligibility for that route is at s. 6015(c)(3)(A)(i): an individual is eligible only if "at the time such election is filed, such individual is no longer married to, or is legally separated from, the individual with whom such individual filed the joint return to which the election relates; or … such individual was not a member of the same household as the individual with whom such joint return was filed at any time during the 12-month period ending on the date such election is filed." Equitable relief is at s. 6015(f), and s. 6015(f)(2) sets its own timing by reference to the collection period and the refund period. Read at https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section6015&num=0&edition=prelim . The Instructions for Form 8857 add: "you must generally file Form 8857 no later than 2 years after the first IRS attempt to collect the tax from you." Note that the Instructions for Form 8857 count four types of relief rather than three, the fourth being relief from liability for tax attributable to an item of community income, which is for married people in community property states who did not file jointly. Section 6015 also protects the other spouse's right to be heard: s. 6015(e)(4) requires the Tax Court to give the non-electing spouse "adequate notice and an opportunity to become a party to a proceeding."

The change was made by the Tax Cuts and Jobs Act. The deduction section is now headed on the United States Code website as "26 USC 215: Repealed. Pub. L. 115-97, title I, §11051(a), Dec. 22, 2017, 131 Stat. 2089", and the income-inclusion section as "26 USC 71: Repealed. Pub. L. 115-97, title I, §11051(b)(1)(B), Dec. 22, 2017, 131 Stat. 2089". Nothing else is left of either section but the effective-date note. The effective-date note attached to both states the operative rule in full: "Repeal applicable to any divorce or separation instrument (as defined in former section 71(b)(2) of this title as in effect before Dec. 22, 2017) executed after Dec. 31, 2018, and to such instruments executed on or before Dec. 31, 2018, and modified after Dec. 31, 2018, if the modification expressly provides that the amendment made by section 11051 of Pub. L. 115–97 applies to such modification." Read at https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section215&num=0&edition=prelim and https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section71&num=0&edition=prelim . For pre-2019 instruments Publication 504 still lists the five conditions a payment must meet to be alimony, including that it be in cash, that the instrument not designate it as not alimony, and that "There is no liability to make any payment (in cash or property) after the death of the recipient spouse." Where alimony is deductible it goes on Schedule 1 (Form 1040), line 19a, with the recipient's Social Security number on line 19b; Publication 504 warns that leaving out that number can cost a $50 penalty and the deduction.

On disguised child support, Publication 504 says: "A payment will be treated as specifically designated as child support to the extent that the payment is reduced either: • On the happening of a contingency relating to your child, or • At a time that can be clearly associated with the contingency," and that events relating to a child include "Becoming employed," "Dying," and others listed in the publication. Publication 504 also lists child support first among payments that are not alimony. For instruments executed after 2018 the point is academic on the alimony side, since alimony itself is no longer deductible or taxable — but the rule that child support is never deductible and never taxable has not changed and never was tied to that date.

The IRS says the same in Publication 504 (2025) under "Basis of property received": "Your basis in property received from your spouse (or former spouse, if incident to your divorce) is the same as your spouse’s adjusted basis. This applies for determining either gain or loss when you later dispose of the property. It applies whether the property’s adjusted basis is less than, equal to, or greater than either its value at the time of the transfer or any consideration you paid." Publication 504 also says the giver has a duty to hand over the records: "When you transfer property to your spouse (or former spouse, if incident to your divorce), you must give your spouse sufficient records to determine the adjusted basis and holding period of the property on the date of the transfer." On the six-year presumption: "A property transfer is related to the end of your marriage if both of the following conditions apply. • The transfer is made under your original or modified divorce or separation instrument. • The transfer occurs within 6 years after the date your marriage ends." There are exceptions to the no-gain rule: section 1041(d) excludes a transfer to a spouse or former spouse who is a nonresident alien, and section 1041(e) excludes transfers in trust to the extent liabilities exceed basis.

The exclusion itself is at 26 U.S.C. s. 121(a): "Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating 2 years or more," with the cap at s. 121(b)(1) — "The amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000" — doubled to $500,000 on a qualifying joint return by s. 121(b)(2)(A). These two figures are set in the statute and are not indexed for inflation. IRS Publication 523, Selling Your Home (for use in preparing 2025 returns), states the tests plainly: "If you owned the home for at least 24 months (2 years) out of the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement. For a married couple filing jointly, only one spouse has to meet the ownership requirement," and "Unlike the ownership requirement, each spouse must meet the residence requirement individually for a married couple filing jointly to get the full exclusion," and on divorce: "If you were separated or divorced prior to the sale of the home, you can treat the home as your residence if: • You are a sole or joint owner, and • Your spouse or former spouse is allowed to live in the home under a divorce or separation instrument and uses the home as his or her main home" (https://www.irs.gov/publications/p523). Publication 523 also confirms that simply transferring the home in the divorce is not a taxable event: "Generally, if you transferred your home (or share of a jointly owned home) to a spouse or ex-spouse as part of a divorce settlement, you are considered to have no gain or loss." Publication 504 (2025) repeats the caps under "Sale of home": "If you sold your main home, you may be able to exclude up to $250,000 (up to $500,000 if you and your spouse file a joint return) of gain on the sale."

Publication 504 continues: "If you don’t pay enough tax either through withholding or by making estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. If you don’t pay enough tax by the due date of each payment, you may have to pay a penalty even if you’re due a refund when you file your tax return." It points to Publication 505, Tax Withholding and Estimated Tax, for the detail. On splitting joint estimated payments: "If you and your spouse made joint estimated tax payments for 2025 but file separate returns, either of you can claim all of your payments, or you can divide them in any way on which you both agree. If you can’t agree, the estimated tax you can claim equals the total estimated tax paid times the tax shown on your separate return for 2025, divided by the total of the tax shown on your 2025 return and your spouse’s 2025 return." Publication 504 also notes that if you got divorced in the year and made joint estimated payments, you enter your former spouse's Social Security number in the space provided on line 26 of Form 1040.

The Instructions for Form 8379 say: "Form 8379 is filed by one spouse (the injured spouse) on a jointly filed tax return when the joint overpayment was (or is expected to be) applied (offset) to a past-due obligation of the other spouse. By filing Form 8379, the injured spouse may be able to get back their share of the joint refund," and "You may be an injured spouse if you file a joint return and all or part of your portion of the overpayment was, or is expected to be, applied (offset) to your spouse's legally enforceable past-due federal tax, state income tax, state unemployment compensation debts, child support, or a federal nontax debt, such as a student loan" (https://www.irs.gov/instructions/i8379). On the two conditions and on timing, Publication 504 says an injured spouse must "Have made and reported tax payments (such as federal income tax withheld from wages or estimated tax payments), or claimed a refundable tax credit, such as the earned income credit or additional child tax credit on the joint return; and • Not be legally obligated to pay the past-due amount," and that in a community property state only the second condition must be met. On how long it takes, Publication 504 says: "If you haven’t filed your joint return and you know that your joint refund will be offset, file Form 8379 with your return. You should receive your refund within 14 weeks from the date the paper return is filed or within 11 weeks from the date the return is filed electronically. If you filed your joint return and your joint refund was offset, file Form 8379 by itself. When filed after offset, it can take up to 8 weeks to receive your refund." You must file Form 8379 for each year this happens.