Ending a marriage is one of the most significant legal and financial negotiations you will ever navigate. Yet, in the midst of the legal battle and emotional mayhem, taxes are often an afterthought. Adding to the challenge, your current tax professional may want to stay neutral and avoid the fray ra ther than help you. (They should probably step aside entirely, as their responsibility was previously to both spouses.) It’s also OK if your accountant opts not to tell you what to do. I am here to share what I have learned, just as I would for a friend going through this. Here are some steps to consider that can help you obtain the best divorce settlement and the lowest tax bill. A better alternative to filing It is not widely known that even if you are not yet divorced, if you did not live with your spouse for the last six months of the year, you may qualify for head of household (HOH) status, which is generally the most advantageous tax filing status for someone going through a divorce. HOH provides a higher standard deduction than other filing statuses like Single or Married Filing Separately and offers lower tax rates, reducing your overall tax liability. If you paid more than half the cost of maintaining a home and have a qualifying dependent, typically a minor child, who lived with you for more than half the year, you could qualify. The benefits of filing as Head of Household can be significant. For 2024, the standard deduction for HOH is $21,900, compared to $14,600 for Single filers. HOH filers also benefit from broader tax brackets, meaning more of their income is taxed at lower rates. It can also help parents qualify for valuable tax credits, such as the Child Tax Credit or Earned Income Tax Credit, depending on income level. If you have more than one qualified child, a good, negotiated option would be for each of you to claim at least one child so you both benefit from this rule. How to file If you do not qualify for Head of Household filing status but were still married on Dec. 31, in most cases, filing Married Filing Jointly (MFJ) will result in lower taxes, a higher standard deduction, and access to more tax credits compared to filing separately. Regardless of your filing status, you should each hire your own tax professional to ensure the tax return is prepared fairly and that any refund or liability is divided correctly. I suggest that one tax professional prepares the joint tax return, and the other can review it, or they can separately prepare drafts of the returns and then hash out a final version for filing. This ensures that both parties benefit from joint filing without one spouse taking advantage of the other. Just be aware that if you both sign and file jointly, you are both liable for the tax now and if you are audited. Let your tax people negotiate for you, and it will be one less issue to argue about. It might be helpful to hire someone who works with your divorce attorney and is an expert in family law taxes. Alimony is not what it used to be Before 2019, a spouse in a high tax bracket (e.g., 37%) could deduct alimony, reducing their tax burden, while the recipient spouse (typically in a lower tax bracket) paid taxes at a lower rate. This arrangement helped make larger support payments more palatable to the payer because they were able to deduct them, and the spouse receiving payments had to pay taxes on the alimony. Now, alimony is no longer deductible to the paying spouse and is no longer taxable to the receiving spouse. Without the deduction, alimony—often called spousal support in modern divorce agreements, is an after-tax out-of-pocket expense, making the paying spouse more resistant to high payments because they have to pay the support after they have paid taxes on the income. This has led to lower support awards or shorter payment durations. So, what should you ask for if your spouse does not want to pay the alimony that you think you require and deserve? Besides cash and investment accounts for immediate needs, you should definitely ask for a larger share of the retirement account via a Qualified Domestic Relations Order (abbreviated as a QDRO), especially if you are older, because it will be appealing to your estranged spouse that it is not immediate cash out-of-pocket for them but something in the future. Plus, they don’t have to write that check every month. A QDRO is a court order that allows a portion of a retirement plan to be divided between divorcing spouses, ensuring the right of the non-account holder spouse to receive a portion of the retirement benefits. By asking your attorney about maximizing the QDRO, if you have another source of current income, you will also be securing your long-term security. Sell the family home? The 2017 tax law changes eliminated many of the tax benefits of owning a home: Most people no longer itemize deductions, and the mortgage interest deduction and deduction for state and local taxes (including property taxes) are now limited. Property insurance and home maintenance costs are increasing rapidly. If refinancing is necessary to remove the ex-spouse from the mortgage, the new loan may come with significantly higher interest rates, making monthly payments even more burdensome. Selling the home during the divorce also allows for a $500,000 capital gain tax exclusion on the sale, whereas keeping the house and selling later may result in a larger tax bill down the road. Considering that you will now be living on one income, it might be wiser to negotiate for other assets that provide financial security and flexibility instead of fighting to keep a home that could lead to economic insecurity. Negotiating for investment portfolios and cash could be more useful in the short term than negotiating for an illiquid, high-cost asset like a house. By prioritizing future financial security over holding on to this major asset, you can avoid being house-rich but cash-poor. The incomes of most women drop 23%-40% in the year after the divorce. By not holding on to the house, you can increase your short-term cash flow and buy yourself some time to adjust to your new budget. A well-negotiated divorce settlement is about both your immediate cash needs for survival and your financial security for years to come. Tax considerations should always be part of the equation, whether you’re negotiating about alimony, selling or keeping the house, or who claims the kids. If your tax advisor is not providing helpful advice and advocating for you, find someone else. With some financial savvy and a little professional help, you can take control of your financial future and move on to the next phase of your life with confidence. Michelle C. Herting is a CPA, accredited in business valuations, and an accredited estate planner specializing in succession planning and estate, gift, and trust taxes. Related Articles Business | Nearly one-third of American adults now trust social media for financial advice: Why that’s a terrible idea Business | High tariffs and car repairs cost: The ripple effect Business | How will federal workforce cuts affect the economy? Business | Average US rate on a 30-year mortgage rises slightly for the second week in a row Business | Haven’t filed your 2021 tax return? You might be missing out on a COVID stimulus check ...read more read less