This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019).
Divorce or separation definitely impact your tax situation. If you have children, there are several tax credits and deductions that will allow you to reduce your taxable income as a single parent. But with the tax law changes under the Tax Cuts and Jobs Act now in effect, filing as a single parent in 2018 will look very different than it did in 2017. Here’s how.
Income Tax Brackets
Before Tax Reform (2017): Divorce and separation change your tax filing status. You could choose to file as single, but the tax rates for head of household are generally lower.
If you filed as head of household on your tax return for tax year 2017, the tax rates were as follows:
|10%||Up to $13,350|
|15%||$13,351 – $50,800|
|25%||$50,801 – $131,200|
|28%||$131,201 – $212,500|
|33%||$212,501 – $416,700|
|35%||$416,701 – $444,550|
|39.6%||$444,551 and up|
If your filing status was single in 2017, the income thresholds were as follows:
|10%||Up to $9,325|
|15%||$9,326 – $37,950|
|25%||$37,951 – $91,900|
|28%||$91,901 – $191,650|
|33%||$191,651 – $416,700|
|35%||$416,701 – $418,400|
|39.6%||$418,401 and up|
After Tax Reform (2018): The tax brackets for tax year 2018 have changed for all filing statuses. The income range in each bracket has expanded, and the rates have dropped across the board. Tax rates for head of household now look like this:
|10%||Up to $13,600|
|12%||$13,601 – $50,800|
|22%||$50,801 – $131,200|
|24%||$131,201 – $212,500|
|32%||$212,501 – $416,700|
|35%||$416,701 – $444,550|
|37%||$444,551 and up|
If filing single, your income rate will be:
|10%||Up to $9,525|
|15%||$9,526 – $38,700|
|25%||$38,701 – $82,500|
|28%||$82,501 – $157,500|
|33%||$157,501 – $200,000|
|35%||$200,001 – $500,000|
|39.6%||$500,001 and up|
The Child Tax Credit
Before Tax Reform (2017): If you are the custodial parent and you claimed the Child Tax Credit for tax year 2017, it was worth up to $1,000 per qualifying child. If your dependent was under age 17, he/she could qualify for the credit with a Social Security number or a TIN (Tax Identification Number). The Child Tax Credit was non-refundable, so if your tax liability went to $0, you did not see the remaining credit balance in your tax refund.
After Tax Reform (2018): Under the Tax Cuts and Jobs Act, the Child Tax Credit has doubled. It is now worth $2,000 per qualifying dependent, but your child must have a Social Security number to be eligible. The new credit is also partially-refundable up to $1,400.
For children over age 17 or who have a TIN instead of a Social Security number, the tax plan introduced a new $500 family tax credit. This credit is non-refundable. It also applies to elderly and disabled family members.
Do your children qualify for the CTC or the new family tax credit? Find out more here.
The Personal Exemption
Before Tax Reform (2017): As the custodial parent in 2017, the Personal Exemption allowed you to lower taxable income by $4,050 for yourself and each dependent in your household.
After Tax Reform (2018): Since tax reform, the Personal Exemption has been eliminated. You cannot use it to lower your taxable income.
The Standard Deduction
Before Tax Reform (2017): If you filed as head of household on your tax return for 2017, the standard deduction for you was worth $9,350. If you filed as single, it was $6,350.
After Tax Reform (2018): The Tax Cuts and Jobs Act increased the standard deduction to $18,000 for heads of household. It is now $12,000 for singles.
If you itemize instead, your deductions will look very different after tax reform. Learn more about the changes affecting below-the-line deductions here.
Reporting and Deducting Alimony
Before Tax Reform (2017): Prior to the tax law changes, any alimony payments paid by you were deductible on your federal income tax return. Alternatively, if you received alimony, you had to report that as taxable income.
After Tax Reform (2018): The new tax law about alimony applies to divorces and settlements made after Dec. 30, 2018. Under the TCJA, alimony payments paid out cannot be deducted from your income for tax purposes. If you are the one receiving alimony, you don’t have to report those payments as income. Note: if you have an existing agreement but you change it after this date, this law will could still affect you if your new agreement states that the TCJA treatment of alimony payments applies.