Are you going through a divorce or a marital separation? If so, the effect that this life change will have on your income tax status is likely to be one of the last things on your mind. However, it's important to consider how a divorce impacts your income tax filing, especially if you normally receive a tax refund each year. The decisions you make during your divorce proceedings can literally make the difference between receiving a refund and owing a balance due on April 15.

Choose a Tax Filing Status

Most married couples file a tax return together and use the "Married Filing Jointly" status. This filing status entitles couples to additional tax benefits such as an increased standard deduction, higher income limits for Earned Income Credit, and double the tax deduction for IRA contributions. As a general rule, your marital status on the last day of the tax year determines your eligibility to file your return as a married couple.

For example, if you are still married on December 31, then you'll have the option to file a joint return for that year. However, some divorces are so contentious that taxpayers prefer to give up the tax benefits than to file a joint tax return with their ex-spouses. If you decide to file a separate tax return, you'll have to use the "Married Filing Separately" status, which greatly reduces your available tax deductions. On the other hand, if you are already divorced by December 31, you can file as either "Single" or "Head of Household," depending on whether you have an eligible dependent such as a child or an elderly parent living with you.

Update Your Tax Withholding

After your divorce is final, you'll also need to adjust your tax withholding exemptions at work. You can do this by requesting to complete a new Form W-4, which allows you to decide how many exemptions to claim during the year. If you've previously been claiming the Married status and an exemption for both you and your spouse, change this to the Single status and one exemption for yourself. If you fail to do this quickly, you may not have enough tax withheld from your income to cover your tax liability for the year.

Going through a divorce is a stressful situation for anyone to deal with. If you take care of the necessary income tax considerations, though, you can reduce the amount of stress you'll have to endure at tax time.