Tax Consequences of Spousal Support in Virginia

     Spousal support is an issue that arises in many Virginia divorce matters. Many factors are considered by a Court when determining an award of spousal support, and a full list can be found in the Code of Virginia § 20-107.1. One of the factors that may be considered in the Richmond, VA area is the tax consequences to each party as a result of paying and receiving spousal support. Prior to January 1, 2019, spousal support payments were generally taxable, meaning that the payments were deductible on the payor’s tax return, and considered as taxable income to the payee. However, in December of 2017, the Tax Cuts and Job Act (TCJA) was enacted. The TCJA included many changes to the way people are taxed and what deductions may be claimed and made significant changes to the taxability of spousal support. 

Provisions Related to the Taxation of Spousal Support Pursuant to the TCJA

     The TCJA provides that as of January 1, 2019, the payor of spousal support can no longer claim deductions for the payments and the payments are no longer considered taxable income to the payee. This provision applies to all cases in which the parties’ Property Settlement Agreement was executed after December 31, 2018, or the parties’ Final Decree of Divorce was entered after December 31, 2018. One exception that applies to this provision is for cases in which the agreement was executed on or before December 31, 2018, and then modified after December 31, 2018, with the modified agreement specifically stating that the TCJA provision related to spousal support applies.

Application of the TCJA Provisions Related to Spousal Support

     For example, consider a case in which the Final Decree of Divorce was entered in 2012. Spousal support was then amended in 2015 and amended a second time in 2023. The TCJA provision would not apply to the amendment made in 2015 since it was not enacted until December of 2017 and put into effect until January 1, 2019. It is possible that TCJA provision would apply to the spousal support amendment made in 2023, but only if the new agreement specifically provides for the TCJA provision.

Consult Your Accountant and Attorney

     It is important to consider these matters when preparing your tax returns, especially if your agreement and/or Order pertaining to spousal support was executed prior to January 1, 2019, and amended thereafter. In these cases, it is advised that you discuss the TCJA provision with your accountant that is assisting you with the preparation of your tax returns, who may then need to confirm with your attorney whether or not your spousal support obligation/award is deductible/taxable. For divorce decrees and support orders entered in 2024 or after (and really on or after January 1, 2019), spousal support payments are no longer deductible as income by the payor (say, Husband) and no longer considered income for the payee (say, Wife).

     If you would like to discuss your options in Virginia, please call one of our offices at 804-325-1245 (Richmond) or 757-941-4298 (Williamsburg) to discuss how our attorneys can be of assistance. Our team of knowledgeable family law professionals is ready to provide you with the guidance and support you need throughout the divorce process, including matters related to alimony, ensuring a fair and equitable resolution that meets your specific needs.
 
Special thanks to Owen Togna for editorial assistance in drafting this article.