Divorce & Taxes: What to Know When the Spark Fades as seen on #ColdPlayKissCam (and the IRS Notices)

At ExFed Tax, we’ve seen some things implode—business partnerships, aggressive tax shelters, and yes, even that Coldplay concert kiss cam situation. (We’re not saying your divorce played out on a stadium screen... but if it did, you’re not alone.)

The truth is, when a relationship ends, the emotional fallout is only part of the story. The tax code has its own post-breakup baggage, and if you’re not careful, you could end up with more financial regret than a surprise concert proposal gone sideways.

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Here’s what you need to know when splitting up triggers the IRS’s version of couples therapy.

Filing Status: Single and Ready to Recalculate

Your marital status for tax purposes is locked in as of December 31st. If the divorce decree was final before year-end, congrats—you’re officially filing as Single or Head of Household, depending on your situation. (Let's not shoot for Qualifying Widow(er))

If you're still legally married, you're technically still stuck with each other on paper. Kind of like that couple on the Jumbotron—still in the shot, even after she ducked out of the frame.

Claiming Dependents: It’s Not Just About Who Pays for Concert Tix

The IRS doesn’t care who pays for piano lessons or who "does more"—they care about custody. The parent who has the child more than 50% of the nights usually gets to claim them for tax purposes.

Unless you sign over that right with Form 8332, you can’t just call dibs. (Trust us, the IRS doesn’t accept screenshots of text arguments or vague verbal agreements over Fix You.)

Alimony & Support: A Tax Shift as Dramatic as a Stadium Walk-Out

If your divorce was finalized before 2019, alimony is still taxable to the recipient and deductible to the payer.

But if your split was sealed after that? Thanks to the Tax Cuts and Jobs Act, alimony is now tax-neutral—no deduction for the payer, no income for the recipient. It’s like everyone lost… kind of like the guy with the bouquet and no kiss.

Child support? Still untaxed. Always has been. Always will be. (Much like your patience at the end of mediation.)

Dividing Assets: Who Gets the House—and the Capital Gains?

Dividing up assets during divorce is not immediately taxable. But when it comes time to sell? That’s when the IRS shows up to collect.

• Property basis carries over, so if you got the house, you also got the built-in gain.

• Retirement accounts need a QDRO—not just a note on a napkin—to be split without early withdrawal penalties.

And no, your ex probably isn’t going to handle that for you out of goodwill. We’ve seen fewer cooperative moments than there were at that Coldplay intermission.

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Planning Ahead: New Status, New Strategy

Post-divorce, it’s time to:

• Adjust withholding on your W-4

• Review estimated payments

• Rethink your tax planning entirely—especially around dependents, deductions, and retirement planning

Yes, it’s a lot. But so is explaining to your coworkers why your breakup is trending literally everywhere.

Don’t Let the IRS Be the Next Unexpected Plot Twist

Breakups are hard. Taxes shouldn’t be. Whether your split was quiet or the stuff of stadium legend, we’re here to help you move forward—strategically, smartly, and without getting blindsided by IRS surprises.

At ExFed Tax, our team of former IRS professionals can help you navigate this next phase with clarity, precision, and maybe just a little eye-roll in solidarity.

📞 Schedule a Divorce Tax Review

Ready to update your tax strategy post-divorce? We’ve got you. Book a consultation today, and let’s make sure your finances recover faster than that poor guy’s ego.

Schedule a Consultation

👉 Start here. We’ll take it from there.