Divorce & Taxes in California: What You Need to Know
Divorce changes your tax situation dramatically. Filing status, deductions, child tax credits, property transfers, and spousal support all have tax implications. Here's what to watch for in California.
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Talk to AI AdvisorFiling Status Changes
Year of divorce
Your filing status on December 31 determines your status for the entire year. If your divorce is final by Dec 31, you file as Single or Head of Household.
Head of Household
If you have a dependent child living with you more than half the year, you may qualify for Head of Household — which has better tax brackets than Single.
Still married on Dec 31?
You can file Married Filing Jointly (usually better) or Married Filing Separately. Be careful — filing jointly means you're both liable for the full tax bill.
Alimony / Spousal Support & Taxes
Post-2018 rule (Tax Cuts and Jobs Act):
- ✓Alimony is NOT deductible for the payer
- ✓Alimony is NOT taxable income for the recipient
- ✓This applies to all divorce agreements executed after December 31, 2018
- ✓Pre-2019 agreements follow the old rules (deductible/taxable) unless modified
Property Transfers
- ✓Transfers between spouses during divorce are generally tax-free (no capital gains tax at transfer)
- ✓BUT the recipient inherits the original cost basis — meaning potential capital gains tax when they later sell
- ✓The family home has a $250K capital gains exclusion ($500K if married) — timing of sale matters
- ✓Retirement account transfers via QDRO are tax-free at transfer; taxes apply on withdrawal
Child-Related Tax Benefits
Child Tax Credit
Generally goes to the custodial parent (the one the child lives with more than half the year). Worth up to $2,000 per child.
Dependency exemption
The custodial parent can agree to release the exemption to the non-custodial parent using IRS Form 8332.
Child care credit
Only the custodial parent can claim the child and dependent care credit.
Every situation is different
Worried about taxes after divorce? Our AI advisor can help you understand the implications for your California situation.
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Legal Disclaimer: This article covers California divorce law for general informational purposes only and does not constitute legal advice. Laws change frequently. Always consult a licensed California family law attorney for advice specific to your situation.