Virginia Spousal Support: New Tax Laws

Posted on Feb 23, 2018 by Katie Carter

Spousal support is a pretty loosey goosey area of law anyway; though there are “guidelines” we can use to calculate an appropriate level of spousal support, those guidelines aren’t binding on any of the courts in Hampton Roads. So, unlike child support, spousal support amounts (and more than that, the duration of a spousal support award, too) are fluid. There’s not a lot of consistency from one case to the next. It can depend a lot on factors beyond just the incomes of the parties (though, of course, that’s where any analysis would start), like the physical and mental condition of the parties, the duration of the marriage, the ability of the parties to work (so things like education and work history are often considered) and so on. There’s a lot involved.

Spousal support is always one of the harder areas of law to get an agreement. Where some things are more or less guaranteed, spousal support is not. It’s fact specific, and often based on a fair amount of negotiation or litigation. Besides that, it’s hard to know for sure how a judge might come down.
Over time, I think the trend is towards judges encouraging women to do what they can to earn what they can outside of the home. Even for a woman who has been unemployed or staying at home for a longer period of time, I see more expectation that she’ll at least attempt to mitigate the change in her position by trying to get a job and earning, even if what she can earn is small, what she can.

Is this fair? Well, it’s hardly relevant. After all, as an attorney told me when I first started practicing, “It’s called the courthouse, not the fairhouse.” Fairness…well, I guess it’s relative. He’s going to say it isn’t fair that he should have to pay for you after the divorce when you’re capable of working. You’re going to say that it isn’t fair that you should sacrifice everything for his career and raising his children for him to provide you with no support once the marriage ends. Ultimately, if it goes to court, it’s up to the judge. Without court, all we can do is negotiate.

Its hard, without bright line rules, or specific formulas. You won’t find any guidelines anywhere that tell you definitively whether you’ll receive spousal support and, if so, how much and for how long. It just doesn’t exist. We can run the guidelines to get an idea of what could potentially happen or what might be reasonable to ask for (or at least give us a range of possible alternatives), but ultimately that’s all they are – guidelines. I’ve seen them followed, and I’ve seen them totally disregarded.

Spousal support is one of those areas of law that tends to make or break agreements. When people threaten to go to court, it’s often over spousal support. There’s a lot of unwillingness to bend on both sides, in many cases.

Spousal support and the new tax laws

Unfortunately, I think it’s probably more than likely that more and more spousal support cases will be negotiated with the upcoming changes to the tax laws.

Up until now, spousal support was considered income to the person receiving it, and it was a tax deduction for the person paying it. So, if you got $1000 a month, you had to set aside a portion to pay your taxes with later on down the line, and, likewise, he got a $1000 a month deduction on his taxes when he filed. A tax deduction isn’t the be all, end all, but it does help at least make a husband feel a little bit better about having to pay spousal support. In fact, it was really the only thing we had to give back to the husband in exchange for his willingness to pay spousal support. And, in many cases, for our clients, receiving spousal support is critical to their financial well being over the long term.

Under the new tax law, spousal support won’t be taxable or deductible. On the one hand, this sounds good because, if you receive spousal support (a new award of spousal support, that is; previous spousal support agreements/orders will be unchanged by the new tax law) you won’t have to pay taxes on it. It’s like free money.

But, on the other hand, removing that deduction is a pretty big deal. After all, it was the only conciliatory point we had at our disposal. It helped smooth over the whole spousal support thing for a husband. It made it less likely that a case would go to court, because at least there was something in it for the husband who paid it.

…But not anymore. Under the law tax law, I think we’re more likely to see cases be litigated, rather than negotiated. Why? Well, a husband will say, what good does it do me to pay it? Might as well take my chances in front of a judge. Worst case scenario, I’ll have to pay it anyway. Best case scenario, she’ll be hard pressed to afford to take me to court anyway, and will have to take what I offer her in an agreement.

See what I mean?

Litigation is expensive, and being up against the necessity of it is difficult, especially if you’re the lesser earning spouse requesting spousal support. It’s easier for the higher wage earner to use his better socioeconomic position against you by forcing you to exhaust your money in lengthy negotiations, and to then go to court anyway. It can be very cost prohibitive.

Will I get spousal support?

That’s the million dollar question, isn’t it? It’s so hard to know ahead of time, and, honestly, the new tax laws are so new, that most of us hardly know how they’ll really impact our cases. We’re a little nervous, as you can probably tell!

With new laws, though, unfortunately only time will tell. We’ll know more as things happen and be able to offer more guidance over the course of the next year.

For more information about how spousal support works, click here.  To schedule an appointment with one of our licensed and experienced Virginia divorce and custody attorneys, give our office a call at 757-425-5200.