Money after divorce: a map of documents and questions

A divorce decree settles who is responsible for what between two people. It does not rewrite every record held by the IRS, a retirement plan, the Social Security Administration or a lender. This guide is a map of the money documents and questions that often come up afterward, with the official source for each. It does not describe how to negotiate a settlement or what a court may decide.

Key takeaways

• Separated is not the same as divorced for federal tax filing. The IRS looks at your status on the last day of the year.
• A divorce decree does not change what a lender or the IRS can collect from someone whose name is on a debt or joint return.
• An IRA and an employer plan are handled by different rules. Keep the two questions apart.
• Social Security divorced-spouse benefits have several conditions. Ten years of marriage is only one of them.
• Questions about custody, support amounts and who should get what belong with your attorney. This guide does not answer them.

This guide is for US readers and covers federal rules only. State family law differs and is not covered. It is educational, not individual investment, tax or legal advice. Valora is not a registered investment adviser and is not arranging advisor matches or introductions at this time. No tax result for your situation is offered here.

The map at a glance

Area	What to check	Official source	Who can answer it
Tax filing status	Whether you were divorced or legally separated on December 31	IRS: Filing taxes after divorce or separation; Publication 504	A tax professional
Past joint returns	Whether you remain responsible for a return you filed together	Publication 504	A tax professional
Alimony	The date your agreement was signed and whether it was later changed	IRS Topic 452	A tax professional
IRA	How any transfer was done and what it said	IRS: Retirement plans FAQs on IRAs	The IRA custodian and a tax professional
Employer retirement plan	Whether a court order was submitted and approved by the plan	Department of Labor: QDRO guide	The plan administrator
Social Security	Whether you meet the conditions for a divorced-spouse benefit	Social Security Administration	The Social Security Administration
Joint accounts and debts	Whose name is on each account, loan and card	Consumer Financial Protection Bureau	Each lender, and your attorney

Taxes: filing status depends on December 31

The IRS says your filing status generally depends on whether you are married or unmarried on the last day of the year. Its page on filing after divorce says:

• If you are separated but not legally separated or divorced at the end of the year, the IRS considers you married for filing purposes until you get a final decree of divorce or separate maintenance.
• If you are legally separated or divorced at the end of the year, you must file as single unless you qualify to file as head of household or you remarry by the end of the year.

Publication 504 adds that an interlocutory decree is not a final decree. It also says that if you and your spouse divorce in one year only to file as unmarried people, intend to remarry each other and do so the next year, you must file as married.

Head of household is a separate filing status with its own eligibility test, and the IRS says some people who are married or legally separated can qualify. The test has more parts than fit here. Use the IRS Interactive Tax Assistant or Publication 504 to check your own year, or ask a tax professional.

Taxes: past joint returns do not go away

Publication 504 says that if you are divorced, you are jointly and individually responsible for any tax, interest and penalties due on a joint return for a tax year ending before your divorce. This applies even if your divorce decree says your former spouse will be responsible for amounts due on previously filed joint returns. The IRS offers several forms of relief from joint liability in some cases, requested on Form 8857 and explained in Publication 971. Which, if any, applies depends on the facts, so it is a question for a tax professional.

Taxes: check the date on alimony

For alimony, the date of the agreement matters. IRS Topic 452 says:

• Under an agreement executed after 2018, the payer cannot deduct alimony payments and the recipient does not include them in income.
• Under an agreement executed before 2019, payments are generally deductible by the payer and included in the recipient's income.
• An agreement executed before 2019 and later modified follows the newer rule only if the modification expressly states that the repeal of the deduction applies.

Not every payment under a divorce agreement is alimony. The IRS says child support, noncash property settlements and voluntary payments are not. The IRS says child support is not deductible by the payer and not taxable to the recipient.

Retirement accounts: an IRA and an employer plan are different

IRAs. The IRS says you can transfer assets from your IRA into your spouse's or former spouse's IRA tax-free under a divorce or separate maintenance decree, but only by a qualified method: changing the name on the IRA if you are transferring your entire interest in it, or a trustee-to-trustee transfer. An indirect rollover does not qualify even if the money is deposited in the former spouse's IRA within 60 days. If you instead withdraw money from your traditional IRA to pay your ex-spouse, the IRS says those amounts are taxable to you, and if you are under age 59 and a half you must also pay the 10% early distribution tax unless you qualify for an exception. The IRS says there is no QDRO-style exception for IRAs.

Employer plans. A different mechanism applies. A qualified domestic relations order, or QDRO, is the mechanism for dividing an employer plan. The Department of Labor's guide explains what a QDRO is and how a plan administrator decides whether an order qualifies. It says a qualifying order may assign some or all of a participant's retirement benefits to a spouse, former spouse, child or other dependent. What a particular order divides depends on its terms and on the plan.

Do not assume that a general divorce decree has divided an employer plan. Ask the plan administrator what it has on file.

Social Security: ten years of marriage is only one condition

The Social Security Administration says a divorced spouse generally needs a marriage that lasted at least 10 years to get benefits on a former spouse's record. That is one condition, not the whole test. SSA's family benefits page lists age 62 or older as another condition. Eligibility also depends on your age, your marital status and the worker's entitlement, so check your own facts with the Social Security Administration directly. This guide does not decide eligibility or recommend a claiming age.

Joint accounts and debts

The Consumer Financial Protection Bureau says:

• Divorce changes the relationship between spouses, but it does not automatically change their relationship with creditors. A decree may assign a debt to one person, but a creditor can still collect from anyone whose name is on the loan or debt.
• You are generally responsible for a debt unless you were released by the creditor or your former spouse refinanced the loan and removed your name.
• Taking your name off a home or vehicle title does not take your name off the mortgage or auto loan, and sending a creditor a copy of the divorce decree does not end your responsibility on a joint account.
• Each holder of a joint credit card account is responsible for the full balance. An authorized user is generally not responsible for the amount owed.
• Joint accounts affect both people's credit scores.
• You generally need your spouse's consent to remove them from a joint checking account.

Questions about what to do about a particular account or debt belong with your attorney and the lender.

Bottom line

A decree does not settle everything. Check the date of any alimony agreement, ask the plan administrator about any employer-plan order, ask the Social Security Administration about your own eligibility, and ask each lender about each joint account or debt. Your attorney and a tax professional can apply this to your facts.

Documents and questions to bring to your professionals

• The final decree or separation instrument, with its date.
• Any agreement about alimony, with the date it was signed and any later modification.
• The documents used for any IRA transfer, and any QDRO and the plan administrator's response.
• A list of every joint account, loan and credit card, with the names on each.
• Copies of past joint tax returns, and any IRS notices.
• Current beneficiary forms on retirement accounts and life insurance.
• Your Social Security statement and your marriage dates.

Want help applying this to your own numbers?

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Common questions

Am I single for tax purposes if I am separated?

The IRS considers you married until you get a final decree of divorce or separate maintenance, if you are separated but not legally separated or divorced at the end of the year.

Does my divorce decree remove me from a joint return or a joint debt?

No. Publication 504 says you remain responsible for a joint return for a year ending before the divorce, and the CFPB says a decree does not change what a creditor can collect from someone whose name is on the debt.

Is alimony taxable?

It depends on the date of the agreement. IRS Topic 452 says that for agreements executed after 2018, the payer cannot deduct payments and the recipient does not include them in income.

Can an IRA be split in a divorce without tax?

The IRS says a transfer under a divorce or separation instrument can be tax-free if it is done by changing the name on the IRA or by a trustee-to-trustee transfer. A withdrawal is taxable and may be subject to the 10% early distribution tax.

What is a QDRO?

It is a qualified domestic relations order. The Department of Labor says a domestic relations order that meets the legal requirements can assign some or all of a participant's retirement benefits to a spouse, former spouse, child or other dependent. What a specific order does depends on its terms and on the plan administrator's decision. The Department of Labor's guide explains it.

Can I get Social Security on my ex-spouse's record?

It depends on conditions that include a marriage of at least 10 years, your age and your current marital status. Ask the Social Security Administration.

What should I send through the inquiry form?

Describe the question you want to ask. Do not submit tax returns, court documents, account numbers or other confidential financial documents.

Sources

Internal Revenue Service: Filing taxes after divorce or separation, Publication 504, Divorced or Separated Individuals, Topic no. 452, Alimony and separate maintenance and Retirement plans FAQs regarding IRAs: distributions and withdrawals.

U.S. Department of Labor, Employee Benefits Security Administration: QDROs: The Division of Retirement Benefits Through Qualified Domestic Relations Orders and Chapter 1, Qualified Domestic Relations Orders: An Overview.

Social Security Administration: Who can get Family benefits and Marriage requirements for spouse's benefits.

Consumer Financial Protection Bureau: Can a debt collector contact me about a debt after a divorce?, Am I responsible for charges on a joint credit card account if I didn't make them?, Do joint credit card accounts with my spouse affect my credit score? and Can I remove my spouse from our joint checking account?.