Virginia spousal support (alimony) is one of the biggest negotiating points during a Virginia divorce. Taxes are one more thing to keep in mind when negotiating Virginia spousal support.
Virginia spousal support is considered income to the recipient, and is a deductible for the payer. Interestingly, Virginia child support is not treated the same. It is not considered income and is therefore not deductible.
Because Virginia spousal support can affect your reportable income, it can also put you in a higher tax bracket. Work with your attorney and a tax advisor to determine likely scenarios.
Here is an example of how an annual Virginia spousal support payment of $20,000 could affect your taxes, assuming a tax rate of 30% for both the payer and recipient.
- Recipient – For the spousal support recipient, the $20,000 payment would be $14,000 after taxes.
- Payer – The payer of the spousal support receives a deduction, so the same $20,000 payment costs the payer $14,000.
It is also common during divorce, for one spouse to negotiate expenses such as health insurance or a mortgage to be paid by the other spouse. Work with your Virginia divorce attorney to determine how these payments are classified and whether they will be considered part of your Virginia spousal support settlement.
Almost every financial agreement in a divorce will have an impact on your taxes. Make informed decisions with an accountant and your Virginia divorce attorney to determine how you will fare financially.
To learn more about the importance of tax issues after divorce in Virginia, visit our article library.
Contacting a Virginia Divorce Attorney
Throughout your divorce proceedings, you’ll naturally have a lot of questions specific to your circumstances. Get your questions answered by requesting a FREE copy of our guide, What Every Virginia Woman Should Know About Divorce, or reserving your seat at our monthly divorce seminar – 757-425-5200.
The Virginia divorce attorneys at Hofheimer Family Law Firm are committed to fighting for your rights, assisting in child custody disputes, and advocating that you receive everything you are entitled to and need in order to start your new life.