Virginia Spousal Support Payments No Longer Deductible for Payer

Neither Party Receives a Child Support Tax Advantage

There may be a nasty surprise in store for people in Hampton Roads who negotiated their own divorce settlement in 2019 without the assistance of divorce attorneys and believe they can take a deduction for the Virginia spousal support they pay. When Congress passed the federal tax overhaul in 2017, it eliminated the alimony deduction beginning with the 2019 tax returns that Poquoson taxpayers will file this year. The new tax law brings good news to those receiving Virginia spousal support because they may no longer need to declare it as income.

Taxpayers need to educate themselves about the new tax law because of the possibility that the old law that made alimony payments deductible may continue to apply to them. It may also be a good idea for people paying or receiving spousal support to consult experienced Newport News alimony attorneys about options available to them under the new law.

Overview of Virginia Spousal Support

Virginia child custody laws require that child custody issues must be decided when a Yorktown court grants a divorce. Child custody attorneys usually attempt to avoid the uncertainty of leaving the decision to a judge by negotiating a child custody agreement. A child support attorney may rely upon an agreement between the parties, but as with cases under Virginia child custody laws, the ultimate decision may be left up to a judge after a hearing in a Yorktown court.

A child support attorney and child custody attorneys representing parents in Williamsburg cases know that divorce and child custody disputes cannot be finalized until settlement of all child support, custody and visitation issues. In contrast, alimony is not a certainty. Spousal support under Virginia law must be requested by the party in need of it, and it can be denied to a party who committed adultery. Divorce attorneys for the parties may negotiate a mutually acceptable arrangement, or they can leave it up to a judge’s discretion whether to grant alimony.

Aside from spousal support being discretionary and based upon need, another factor that sets it apart from child support is the lack of an accepted formula to calculate the amount of support a spouse should receive. Instead, it is left to judges in courts in Poquoson, Yorktown and other communities to decide upon an appropriate amount by taking into consideration several factors, including the following:

• Standard of living established by the parties during their marriage.
• Length of time the parties were together as a couple.
• Age and health of the parties.
• Financial resources, including debts and obligations, of the parties.
• Distribution in the divorce of marital property.
• Earning capacity of each of the parties.
• Education and training needed to enhance a party’s ability to earn a living.
• Contributions a party seeking alimony made to the ability of the other party to pursue education, employment or career opportunities during the marriage.
• Tax consequences to each party.

Spousal support attorneys working with local courts have relied upon the fact that federal tax law allowed a deduction for spousal support payments made by the paying spouse. The spouse receiving the payments had to declare them as taxable income. The tax consequences and benefits of spousal support have now changed.

Federal Tax Overhaul Causes Tax Consequences for Virginia Alimony

The 2017 federal tax overhaul eliminated the alimony deduction effective as of Jan. 1, 2019. It may increase the taxes owed by some Virginia taxpayers. Spouses or former spouses receiving alimony no longer need to list it as income.

Elimination of the alimony deduction does not apply to everyone. Anyone making spousal support payments under the terms of a separation agreement, a divorce settlement agreement or a court order finalized on or before Dec. 31, 2018, may continue to take the alimony deduction. Their spouses or former spouses must continue to claim the payments as income.

Payments for alimony must meet the following criteria to be deductible by the person paying them:

• Parties must file separate tax returns;
• Payments must be made by cash or check;
• Payments must be made under a divorce settlement agreement, separation agreement or court order and made payable to a spouse or former spouse;
• Party making the payment cannot reside in the same household as the party receiving it; and
• Alimony obligation ends upon the death of the person entitled to it.

The rules making alimony payments deductible do not apply to payments made for child support or as a distribution of marital assets.

Contact our Compassionate Family Law Attorneys

The family law attorneys at the Denbigh Law Center have been providing residents throughout the Virginia Peninsula with trusted legal advice and representation about Virginia child custody laws and divorce-related issues since 1982. Their reputation as outstanding Newport News alimony attorneys make it the law firm people in Poquoson, Williamsburg and other Hampton Roads communities rely upon when in need of an attorney. Schedule an appointment now by calling them at 757-877-2244.