Utah Divorce Guides
Divorce & Taxes
Filing status, alimony tax rules after TCJA, dependency exemptions, home sale exclusions, QDROs, and more — a complete tax guide for Utah divorcing couples.
Filing Status
Your filing status for a tax year is determined by your marital status on December 31 of that year.
☐Divorce finalized before Dec 31
You are considered "single" (or head of household if qualifying) for the entire tax year — even if you were married for most of it.
☐Still married on Dec 31
You can file Married Filing Jointly (lower rates, more deductions) or Married Filing Separately. MFS often results in higher taxes but may be necessary to protect yourself from a spouse's tax liability.
☐Head of Household
If you're single, paid more than half your home costs, and had a qualifying child living with you more than half the year, you may qualify for this more favorable status.
Alimony Tax Changes (TCJA 2018)
Critical rule change: For divorce or separation agreements executed after December 31, 2018, alimony is no longer deductible by the payor and no longer taxable income to the recipient.
Divorce finalized after 12/31/2018No deduction / No income
Divorce finalized before 1/1/2019Deductible by payor / Taxable to recipient
Pre-2019 agreement modified after 2018Old rules apply unless modification says otherwise
Child Tax Credit & Dependency Exemptions
The IRS generally awards the child tax credit to the custodial parent (the parent with whom the child lives more nights). However, this can be transferred.
☐IRS Form 8332
The custodial parent can release the exemption to the non-custodial parent using Form 8332. This must be attached to the non-custodial parent's return each year.
☐Alternating years
Many divorce decrees split the credit by alternating years — e.g., mom claims odd years, dad claims even years. The decree should be clear and Form 8332 signed accordingly.
Dependent Care FSA After Divorce
A Dependent Care FSA (Flexible Spending Account) can only be used by the employee who contributes to it. After divorce:
☐Only the contributing parent can use FSA funds
The non-employee spouse loses access to employer FSA benefits after divorce is final.
☐Qualifying expenses still require custody
FSA dependent care expenses must be for a qualifying dependent — generally the custodial parent's child. The child must live with you to qualify.
Home Sale Exclusion
Single filer exclusion$250,000
Married filing jointly exclusion$500,000
If you sell the home during or after divorce, you must have lived in the home as your primary residence for 2 of the last 5 years to qualify. Selling before the divorce is final while still married can preserve the $500k exclusion.
IRC § 1041 transfers: Property transferred between spouses (or former spouses incident to divorce) is generally not a taxable event. The recipient takes the transferor's original cost basis — meaning they may owe capital gains tax on the full appreciation when they eventually sell.
QDROs and Retirement Account Taxes
A Qualified Domestic Relations Order (QDRO) is the court order used to divide 401(k)s and pensions in divorce.
☐No tax on the QDRO transfer itself
Moving funds via a properly executed QDRO is not a taxable distribution event for either spouse.
☐Recipient pays ordinary income tax on withdrawal
When the recipient spouse eventually withdraws funds from the inherited retirement account, they pay ordinary income tax at their rate — not the original account holder's rate.
☐Consider Roth conversions
If your income drops significantly post-divorce, it may be a strategic time to convert traditional IRA funds to Roth — paying tax now at a potentially lower rate for tax-free growth later.
Child Support & Taxes
Child support is simple: it is never taxable income to the recipient and never tax-deductible by the payor. This is true regardless of when the divorce was finalized.
Capital Gains on Property Transfers (IRC § 1041)
Generally, no gain or loss is recognized on transfers of property between spouses — or between former spouses if the transfer is incident to divorce. "Incident to divorce" means within one year of the divorce, or within six years if required under the divorce instrument.
☐Carryover basis rule
The recipient takes the transferor's original basis. If you receive a property that was purchased for $200k but is now worth $500k, your basis is $200k — and you'll owe capital gains on $300k when you eventually sell.
☐Equalize after-tax values, not face values
A $300k investment account and a $300k home are not equal after taxes. The home may have a low basis (large embedded gain) while the investment account has a high basis. Always compare after-tax values when negotiating property division.
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