What to Expect the First Time You File Taxes After a Divorce

 Posted on January 30, 2026 in Illinois Divorce

Filing taxes during or after a divorce can feel overwhelming. In 2026, understanding how divorce affects your taxes will help you avoid costly mistakes. A St. Charles divorce lawyer can help you make a plan that keeps you away from common pitfalls.

How Does Divorce Affect Your Tax Filing Status in Illinois?

Your tax filing status depends on your marital status as of December 31st. If your divorce was finalized by year’s end, you must file as "single" or "head of household," not "married filing jointly."

If your divorce was not final by December 31st, you can still file jointly if both spouses agree. Filing jointly may reduce your tax burden, but both spouses have liability for any errors or penalties. Many divorcing couples file separately to avoid this risk.

The custodial parent –  the person the child lives with more of the time – may file as "head of household." This provides better tax benefits than filing as single.

How Do We Split Tax Breaks from Our Children After the Divorce?

The custodial parent usually takes the dependency exemption, but parents can work out different arrangements like alternating years or splitting the children if there is more than one.

Taking the exemption reduces your tax burden and increases your net income. Under the Illinois Marriage and Dissolution of Marriage Act  (750 ILCS 5/505), this can affect child support and spousal support obligations, so make sure you are aware of the impacts.

How Is Spousal Support Affected by Taxes?

Big changes to federal tax law took effect on January 1, 2019. For all divorce judgments entered after that date:

• Spousal maintenance payments are not tax-deductible for the paying spouse.

• Spousal maintenance payments are not taxable income for the receiving spouse.

This is a major change from before 2019, when the paying spouse could deduct payments, and the receiving spouse paid income tax on them. If your divorce judgment was entered before January 1, 2019, the old rules still apply to you.

Will We Get Taxed If We Split Our Retirement Accounts After the Divorce?

Retirement accounts are usually considered marital property in Illinois and must be divided. Dividing these accounts incorrectly can result in serious tax penalties, though.

To divide a 401(k) without penalties, you need a Qualified Domestic Relations Order (QDRO). This court order tells the retirement plan administrator how to divide the account between spouses.

Without a QDRO, early withdrawals usually result in a 10 percent penalty, plus income tax on the full amount. A proper QDRO allows you to transfer funds without these penalties.

Do Capital Gains Taxes Apply to Selling a Family Home After Divorce?

When you sell your home as part of a divorce, you may need to pay capital gains taxes on any profit. However, federal tax law allows each spouse to exclude some capital gains from taxation if they meet certain requirements.

You typically must have owned and lived in the home for at least two of the five years before the sale. In some divorces, one spouse keeps the home and buys out the other spouse's share. The spouse keeping the home may need to refinance. The other spouse should make sure their name is removed from the mortgage.

When Should You File Your Taxes After Divorce?

If you are the custodial parent with a claim to the children, file as early as possible. Once one parent files and claims the children, the other parent cannot claim them for the same tax year. Sorting out errors with the IRS if both parents claim them can be time-consuming.

Gather all necessary documents before filing:

• W-2 and 1099 forms.

• Documentation of spousal support (if divorce was before 2019).

• Records of property sales.

• Documentation of retirement account divisions.

Call a Kane County Divorce Attorney Today

Filing taxes after divorce is complicated, to say the least. The financial decisions you make during your divorce can affect your taxes for a long time. A St. Charles divorce tax lawyer at Weiler & Associates, P.C. can help you understand how to jump through tax hoops correctly after your divorce. 

Tim Weiler is a Certified Financial Litigator with specific experience helping clients litigate and settle very complex financial matters in divorce. Our firm can help you make informed decisions about filing status, dependency exemptions, spousal support, and property division. Contact Weiler & Associates, P.C. at 630-331-9110 today to schedule a consultation.