How Does Divorce Impact Your Taxes in Illinois?

 Posted on July 17, 2025 in Divorce

Going through a divorce means significant changes in your life, and one area people often overlook is how it affects taxes. Divorce can influence how you file taxes, whether you can include certain deductions, and what financial consequences you may face when dividing property. Understanding these changes can help you avoid costly surprises, and an experienced Geneva, IL divorce lawyer can help.

Filing Federal Income Tax After Divorce in Illinois

Your marital status as of December 31 determines how you must file for that year. If your divorce is finalized before the end of the year, you will typically file as "single" or "head of household." If you are still legally married on December 31, even if separated, you may still file jointly or as "married filing separately."

Filing jointly often provides tax benefits like a higher standard deduction and better tax brackets. However, joint filers are both responsible for any taxes owed or mistakes on the return. If you have concerns about your spouse’s honesty or finances, filing separately might be safe, though it usually results in higher taxes.

Can You Deduct Alimony From Your Taxes?

Illinois law refers to alimony, also known as maintenance or spousal support, under 750 ILCS 5/504. Whether it is deductible depends on when your divorce was finalized. Before January 1, 2019, the person paying spousal maintenance could deduct those payments on their federal taxes, and the person receiving it had to include it as income. However, under the Tax Cuts and Jobs Act, divorces finalized on or after January 1, 2019, no longer allow the payor to deduct alimony, and recipients do not report it as income. This change can significantly affect the financial negotiations in a divorce settlement.

Does Child Support Impact Your Taxes?

Under Section 505 of the Illinois Marriage and Dissolution of Marriage Act, the statute emphasizes the importance of financial support for children, and courts calculate child support based on both parents’ incomes. However, it has never been deductible for the paying parent or taxable income for the receiving parent. These payments are strictly meant for the support and care of your children and do not affect your federal income taxes.

When it comes to children and taxes post-divorce, the most common concern is over who gets to claim the kids. The Child Tax Credit you receive from claiming a child as a dependent can result in significant savings. Generally, the custodial parent, meaning the one who has the child the most, will claim them. However, if you have shared custody, known as parental responsibilities in Illinois, you can work together to figure out how you would prefer to split the right to claim your shared dependents.

Does Dividing Property Trigger Tax Consequences During Divorce in Illinois?

Section 503 of the Marriage Act states that property is divided equitably, not necessarily equally, and tax implications should be a consideration when determining who gets what. Generally, transfers of property are not taxed. However, the recipient may face taxes later. For example, selling a home might trigger capital gains taxation. Retirement accounts present other potential tax issues. For instance, splitting a 401(k) or pension often requires a Qualified Domestic Relations Order to avoid early withdrawal penalties and taxes.

Contact a Geneva, IL Divorce Attorney Today

Taxes after divorce can be complicated. Mistakes can cost you money for years to come. For guidance on how divorce may affect your tax situation, speak with the experienced Kane County, IL divorce lawyers at Serrano Hanson & Hurtado, LLC. Call 630-844-8781 today to schedule a free consultation. Hablamos Español.