How to File Taxes after a Divorce in Illinois: Step-by-Step Guide
Just as your life changes significantly after divorce, so do your taxes. Your final divorce documents provide a roadmap for your tax situation, and you’ll want to keep them handy as you begin filing with the Illinois Department of Revenue and the IRS.
This guide will help, too. We’ll walk you through common questions and help you determine what documents you’ll need to file properly in Illinois.
Steps for filing taxes in Illinois after divorce
Many of the steps you’ll follow to file taxes after divorce are similar to those you used while married. But some of the questions you breezed right through in the past can cause confusion this year. Follow these steps to tackle this process the right way.
1. Collect necessary financial documents
Your tax documents should provide a clear picture of your financial health as a single person. You probably took steps to prepare when your divorce was finalized.
When you switched from married to single, you should have filed a new Form W-4 with your employer to make sure you’re withholding the proper taxes. Illinois has a flat income tax rate of 4.95%, so your status won’t impact the withholding. But the IRS is very different.
Your employer will provide you with W2s you’ll need for your taxes. You may also need these financial documents:
- 1098 forms from your bank (if you’re paying back a mortgage and want to claim the interest on your taxes)
- Receipts from schools (if you want to claim educational expenses)
- Receipts from organizations to which you’ve made charitable contributions
You may need a few more financial documents, which we’ll explain as we move through this guide.
2. Gather identifying information
If you changed your name as part of the divorce, you must notify the Social Security Administration (SSA) and ask for a new card. The IRS will check, and if your name on the return doesn’t match the SSA records, your return may take longer to process.
Before you start your tax return, gather your current SSA card, along with any similar identifying documents for the children you’ll claim in your tax documents.
3. Determine your tax filing status after divorce
Tax forms require you to designate whether you’re single or married. That status is determined by the state you’re in on the last day of the year. If your final divorce documents from your Illinois courts are dated before December 31, you’re officially single from a tax perspective.
4. Determine your parental designation
For families with children, childcare takes up plenty of divorce conversations. All of your negotiations should be outlined in your final documents. You’ll need those details for your taxes.
Custody has a significant impact on your taxes. If your shared children live with you more nights per year than they live with your ex, you could claim that child on your tax return and file as the head of household (with the associated credits applied).
In some divorce settlements, families take turns claiming the credits associated with the child. If you share custody 50/50, for example, this could be a good approach.
Read your documents carefully to understand what you can claim on your taxes per your divorce agreement. If you have questions, get clarity before you file.
5. Understand child support and alimony
Your child support and alimony payments don’t always impact your taxes. Per the IRS and the Illinois Department of Revenue, child support payments are neither expenses nor income. Instead, they’re routine expenditures parents pay to help their children grow up strong and healthy.
Rules regarding alimony or spousal support changed in 2019. Divorces processed after this time that include alimony are basically null from a tax perspective. Money you pay isn’t deductible, and funds you accept aren’t income. This same rule applies to both your federal and state taxes.
Suggested: Is Spousal Support Tax Deductible? And Other Spousal Support FAQ
6. Research your asset division
During your divorce, you and your spouse must split your assets from shared to individual ownership. Often, the family home is the largest item people must decide about.
If your home was transferred to your sole ownership as part of your divorce, it’s not a taxable transaction. Neither the IRS nor Illinois officials will apply taxes on these sorts of movements in ownership.
If you got sole ownership of the home and then sold it, however, your taxes certainly would be impacted. The IRS issues taxes on profits made from some types of homes. If you sold your home, you’ll get a document that details how much you made, and you can apply those figures to your taxes and see how much you owe.
If your asset divisions involved a retirement account, you might face tax issues. For example, if you got money through a QDRO and didn’t apply it to an IRA, it could be considered taxable income. These situations can be complex, and hopefully, you examined them carefully during your divorce.
7. Research tax credits
As a single person, you may be eligible for tax credits that weren’t available during your marriage.
These tax credits could lower your payment burden and help you save money.
- Child Tax Credit: You’re eligible if the child is younger than 17 years old, relies on you for more than half of their financial support, lives with you, and is claimed as your dependent.
- Earned Income Tax Credit: This is for low-income to moderate-income families. The more children you have, the tighter your budget and the more likely you are to qualify for this credit.
- Premium Tax Credit: This refundable credit can help you cover the cost of health insurance purchased through the Health Insurance Marketplace.
8. Read about deductions
Plenty of misinformation swirls around the internet, and it can make filing your taxes more complicated. For example, you may believe you can deduct your divorce legal fees. This isn’t true.
Similarly, you can’t deduct the amount you spent moving to a new home, taking time away from work for your court dates, or eating out because your divorce made cooking impossible. There are a lot of expenses related to divorce that you simply can’t deduct on your taxes.
How to file your taxes after divorce
Two main methods are available for filing taxes after divorce: online and in person.
You can download paper forms from the IRS and Illinois. Most forms come with detailed instructions that can help you fill out each field directly.
You can also use online tools like IRS Free File and MyTax Illinois to file your forms electronically. Paid services like TurboTax offer much the same service but with a relatively hefty price tag.
Online tools often come with step-by-step tutorials. The program offers questions to help you spot your deductions, credits, and liabilities. Rather than wading through forms and paperwork independently, you could answer the questions and let the program do the hard work for you.
No matter what method you choose, know that you must file your federal taxes before you file your Illinois state tax forms. The data you put in your federal form will flow into the state version, so it’s important to do them in the right order.
References
Some Tax Considerations for People Who Are Separating or Divorcing. (June 2022). Internal Revenue Service.Income Tax Rates. Illinois Department of Revenue.
Filing Taxes After Divorce or Separation. (October 2023). Internal Revenue Service.
Child Tax Credit. (August 2023). Internal Revenue Service.
Earned Income Tax Credit (EITC). (September 2023). Internal Revenue Service.
The Premium Tax Credit: The Basics. (October 2023). Internal Revenue Service.
Publication 529: Miscellaneous Deductions. (December 2020). Internal Revenue Service.
Forms, Instructions, and Publications. (November 2023). Internal Revenue Service.
File Form IL-1040, Individual Income Tax Return, on MyTax Illinois. Illinois Department of Revenue.
IRS Free File: Do Your Taxes for Free. (November 2023). Internal Revenue Service.
