Filing taxes after divorce isn’t just complicated—it’s a minefield if you’re not properly prepared.
If you’ve recently separated or finalized your divorce, tax season can catch you off guard with costly mistakes, missed credits, or even unexpected audits from the CRA.
At Russell Alexander Collaborative Family Lawyers, we’ve seen firsthand how post-divorce tax confusion can create stress long after the separation papers are signed. Inspired by a recent Globe and Mail piece by Anna Sharratt, we’ve built on her advice—and added a few blind spots that we often see clients miss here in Ontario.
Let’s walk through the biggest tax traps you’ll want to avoid.
1. Waiting Too Long to Tell the CRA You’re Separated
Many people assume they don’t need to update their relationship status until the divorce is finalized. But in Ontario, the CRA considers you officially “separated” after 90 days of living apart due to marital breakdown.
Why it matters: Failing to update your status can result in overpaid or underpaid benefits (like the Canada Child Benefit or GST/HST credits), which the CRA will claw back later—sometimes with penalties.
2. No Separation Agreement? You May Be Paying More Tax Than You Should
Even in amicable splits, many couples skip creating a formal separation agreement—only to find out they’re missing out on tax deductions and credits.
Here’s the problem: Without a written agreement, the CRA won’t recognize your support payments, parenting arrangement, or household changes. That could mean lost deductions, denied claims, or double taxation.
3. Vague or Incomplete Agreements Open the Door to CRA Penalties
A solid separation agreement should do more than just divide assets. It should include:
- Specific dates of separation
- Who is paying support (and how much)
- Division of RRSPs, pensions, and debts
- Parenting time and decision-making responsibility
- Dispute resolution process
Blind spot alert: Transfers of RRSPs or property must be clearly documented in the agreement. If they’re not, the CRA may treat them as income for one party and contributions for the other—triggering unintended tax bills.
4. Disorganized Records = Delayed Refunds or CRA Audits
Separation is emotional—and paperwork often falls through the cracks. But come tax season, you’ll need:
- Receipts for support payments
- Copies of your separation agreement
- SINs for dependents
- Proof of address changes
If your ex has all the documents and you’re not speaking? You may be left guessing about which credits you can claim—and who’s already claimed them.
5. Claiming the Wrong Tax Credits—Or the Same Ones as Your Ex
Who claims the children? Who deducts spousal support? What about eligible dependent credits?
One of the most common mistakes is both parents claiming the same child or tax benefit. The CRA will catch this—and usually reject both returns until it’s resolved.
Important distinction:
- Spousal support is deductible for the payer and taxable for the recipient—but only if paid under a written agreement.
- Child support is not deductible or taxable.
- Shared custody creates additional complexity—especially if parenting time is close to 50/50.
6. Relying on DIY Tax Software After a Divorce
Tax software can be useful—but it’s not always built for the complexities of separation.
Example: A higher-income parent who pays support might be prompted by the software to claim the eligible dependent credit—even if they aren’t legally entitled to it. That’s a red flag to the CRA.
Tip: If your relationship status, parenting, or financial arrangements changed recently, work with a tax professional who understands family law.
7. Missing the Timing on Spousal Support Deductions
Here’s a common mistake we see in Ontario: A spouse starts paying support before the separation agreement is signed. Those payments won’t be deductible.
To claim spousal support as a deduction, you must have a written agreement (or court order) in place that outlines the terms of payment. Timing matters.
Final Thought: Don’t Let Tax Time Undermine Your Fresh Start
Divorce is about more than just untangling emotional ties—it’s also about managing the legal and financial transition. Failing to prepare can create long-term headaches and unexpected financial consequences.
At Russell Alexander Collaborative Family Lawyers, we work closely with accountants and financial advisors to help clients build strong, clear agreements that stand up to scrutiny at tax time.
Need help drafting or updating your separation agreement in Ontario? Let’s talk. Our team is here to help you avoid costly mistakes and move forward with clarity.
Adapted with credit to Anna Sharratt’s original article in The Globe and Mail: “Tax season is even more complex for the recently divorced. Here are common mistakes to avoid.”
