Completing a new W-4 form is something that many people only think of when starting a new job. However, because several things such as filing status and the amount and type of exemptions and deductions you are allowed to take advantage of changes post-divorce, it is very important to adjust tax withholdings after divorce. This may be done by completing a new W-4 form and submitting it to your employer. Generally, completing this task is as simple as requesting a new W-4 form from your employer, making the necessary adjustments, and returning it to your employer’s payroll or human resources department.
It is important to adjust your tax withholding post-divorce because married individuals who file joint federal income tax returns qualify for lower tax rates and other deductions. Divorced individuals loose those tax benefits and many deductions. Thus failing to make the necessary withholding adjustments could cause an underpayment of taxes throughout the year resulting in a large and unexpected tax liability at tax time. It is also imperative for divorced individuals to adjust their withholdings post-divorce because according to IRS rules, in the event of divorce, individuals must submit an updated W-4 form to their employer within 10 days after the divorce becomes final. For more details regarding when and how to change tax withholding see IRS Publication 505, Tax Withholding and Estimated Tax.