You may argue the political disingenuousness of the name of the recently passed tax law, “Tax Cuts and Jobs Act,” depending on whether or not you are an American receiving either meaningful tax cuts and/or an improved job. Pushing aside the benefits you may or may not see from the law that was passed, locked within the Act’s broadly sweeping reforms is a provision bound to hit divorcing Virginia men in the wallets, and not in a good way.
Watch the Calendar for Your Divorce Filing
Beginning in 2019, the tax deduction for spousal support disappears (R.I.P. after 75 years). If your divorce begins January 1, 2019, whichever spouse pays spousal support to the other will no longer be able to deduct it, and the receiving spouse will no longer have to pay taxes on it as income.
For Virginia men contemplating divorce, the waiting-and-watching time is over. You need instead to watch the calendar, so you can get the process of divorce started before the December 31, 2018 deadline.
For procrastinating men and their Virginia attorneys, New Year’s Eve is a Monday, and not a federal holiday, though it is a Virginia state holiday. Courts will be closed, which of course means your last day to commence a Virginia divorce and be able to get the tax break is Friday, December 28, 2018.
Back up six months before that date. Thursday, June 28, 2018 would be your deadline for establishing a separation date (if you have no children, under Code of Virginia § 20-91) in an uncontested divorce.
If you have children, you have, sadly, already missed the deadline, since § 20-91 requires a year of separation before you can get an uncontested divorce and still get tax benefits as the payor of the spousal support.
Divorce Filed on Fault Grounds
An uncontested divorce is the fastest, easiest way to get a Virginia divorce, but it is not the only way. The same section of Virginia Code gives you some other avenues, but you must keep an eye on the calendar nonetheless.
We have spoken before about fault grounds that can hasten the date of divorce, short-circuiting the six-month or twelve-month separation period. Fault grounds are not pretty. They create a contentious environment, and cast serious side-eye on one or both divorcing parties:
- Felony conviction
Your divorce attorney can best advise you on a strategy to file the right motion for divorce, for the right reasons. Claims your wife was unfaithful, for example, may help speed up your divorce, but they would also lay the foundation for not paying spousal support, since those payments are contingent on reasons for divorcing. Then the tax effect is moot.
Think of the Children
Spousal support is separate from child support, but the two are related. If you are bringing home a larger slice of bacon than your bread-winning wife (bacon and bread — sounds like breakfast), you will almost certainly pay spousal support after divorce.
If your ex-wife gets physical custody of the children, the court will expect the totality of her life to remain as unchanged (financially) as possible, so between child support and spousal support, you will be paying to maintain your family in the style to which they grew accustomed during the marriage.
Child support payments always were and will continue to be neither tax deductions for the payor nor taxable for the payee. With you no longer able to deduct your spousal payments, you will feel a significant impact on your taxes after December 31 of this year.
Just as mortgage deductions were created as incentives to increase home ownership, the current Congress saw deductibility of spousal support payments as a subsidy for divorce. It seemed to provide an incentive to divorce, even if Virginians divorce at fairly steady rates year in and year out, according to the Virginia Department of Health.
With that incentive removed, divorces will no longer (at least in theory) be subsidized by taxpayers. The effect will be to shift the financial burden onto the payor (usually the Virginia man, but not always) and the payee, who must report the payments as income.
How Big of a Difference Does It Really Make?
Suppose you pay $2,500 a month in spousal support, federally taxed at 33 percent; current law (deducting the payment) saves you $9,900 annually. Your ex-wife has a lower income (which is why you are paying spousal support), so when she receives $30,000 a year from you, she pays only 15 percent federal tax, or $4,500. Between the two of you, you saved $5,400 in federal taxes.
That is now disappearing, unless you act quickly to separate, then file for divorce in Virginia. Another wild card is the November elections, when a turnover in Congress could produce future legislation to change the tax laws yet again.
When you call The Firm For Men at 757-383-9184, or contact us online, you can get answers to even the trickiest questions of divorce, spousal support payments, and more. We will be happy to help defend your rights as a Virginia man.