Spousal Support in Virginia
Spousal support issues arise in Virginia divorces where the parties have been married for a substantial length of time and there is a significant gap in their incomes. In these cases, determination of a proper amount and duration of spousal support (called “alimony” in other states) can become very difficult.
Does Virginia Have Spousal Support Guidelines?
Unlike child support, Virginia does not have a statewide formula for determining a “presumptive” amount of spousal support in all spousal support cases. We do have some local guidelines—in Northern Virginia we have guidelines from Fairfax and Harrisonburg. These guidelines, however, are in no way binding on circuit courts in Virginia divorce cases. They don’t establish a binding or even presumptive amount of support; in fact, our divorce courts are usually free to completely ignore them.
More than that, these local guidelines were only really designed for establishing “pendente lite” spousal support—basically, temporary spousal support to be paid until the divorce is finalized. Also, the Fairfax guidelines (the most important of the local guidelines for Northern Virginia cases) include the caveat that they were not designed for “high income” cases, where the combined monthly gross income of the parties exceeds $10,000.
Nevertheless, depending on the judge and the jurisdiction, circuit courts in Virginia do often look to these local guidelines for assistance in determining a proper spousal support amount. Many judges will look to these guidelines as a starting point in evaluating spousal support.
So, how do these guidelines work? Where the parties have minor children in common, the Fairfax guidelines take 28% of the gross income of the spouse with the higher income, and subtract from that 58% of the gross income of the other spouse. The result is the spousal support amount. Where the parties have no minor children in common, the formula changes to 30% of the higher paid spouse’s income less 50% of the lower paid spouse’s income. (The Harrisonburg guidelines follow a similar approach, but with different percentages).
So, the Fairfax spousal support guidelines could be stated as:
Cases With Minor Children: 28% x Payor’s Income – 58% x Payee’s Income
Cases With No Minor Children: 30% x Payor’s Income – 50% x Payee’s Income
Example 1: assume Husband and Wife share a minor child, Husband earns $8,000 per month, and Wife earns $2,000 per month. Under the Fairfax guidelines, the pendente lite spousal support amount would be $1,080 per month: ($8,000 x .28) – ($2,000 x .58).
Example 2: assume Husband and Wife have no children, Husband earns $8,000 per month, and Wife earns $2,000 per month. Under the Fairfax guidelines, the pendente lite spousal support amount would be $1,400 per month: ($8,000 x .30) – ($2,000 x .50).
Where there is both child and spousal support payable between the parties, the spousal support is calculated first, then the parties’ incomes are adjusted by the spousal support and the resulting incomes are used to calculate child support in accordance with the child support guidelines.
The Fairfax and Harrisonburg guidelines do not take taxes into account, nor do they take into account the parties’ actual needs going forward. Again, they were originally designed only to provide a temporary spousal support amount, until the court could hold a final hearing and make a more considered spousal support evaluation.
So How Do Courts Determine Spousal Support in Virginia?
Virginia courts must first determine whether the party seeking spousal support is eligible to receive it—by looking at the factors and circumstances that contributed to the dissolution of the marriage. Adultery by one spouse will usually, although not always, bar that spouse from receiving spousal support. See Adultery and Divorce in Virginia.
If the party seeking spousal support is not barred from receiving it, the court must then determine the nature, amount and duration of a potential spousal support award, by considering the factors found in Virginia Code § 20-107.1. These factors include the incomes and financial needs of both parties, the duration of the marriage, the standard of living established during the marriage, etc. An important factor in many cases is: “[t]he decisions regarding employment, career, economics, education and parenting arrangements made by the parties during the marriage and their effect on present and future earning potential, including the length of time one or both of the parties have been absent from the job market.”
The problem is that the court, in a contested case, is tasked with translating all of those factors into a dollar amount for monthly spousal support—no easy task. The local guidelines do provide an actual dollar figure, making them attractive as a starting point for courts in evaluating spousal support.
Pendente Lite Spousal Support
Virginia Code § 20-103 provides that in any case where spousal support is in dispute, a Virginia court may enter an order of temporary support pending the conclusion of the case. § 20-103 applies in divorce, annulment, and separate maintenance cases in circuit court, as well as spousal support proceedings brought in juvenile and domestic relations district court (“JDR court”). Such a “pendente lite” order of support will last until the conclusion of the case, at which time the court may order more or less support, or no support at all, depending upon the facts of the case.
JDR Courts. Virginia Code § 16.1-278.17:1 states a formula for determining the “presumptive” amount of pendente lite spousal support in JDR cases. The formula only applies to cases where the parties’ combined monthly gross income does not exceed $10,000. The JDR court must order the amount of pendente lite spousal support stated in the formula, unless it finds “good cause” to “deviate” from the presumptive amount. The formula stated in § 16.1-278.17:1 is identical to the formula stated in the Fairfax guidelines: (a) 30% of the gross income of the payor less 50% of the gross income of the payee in cases with no minor children and (b) 28% of the gross income of the payor less 58% of the gross income of the payee in cases where the parties have minor children in common.
Circuit Courts. At pendente lite spousal support hearings in circuit court cases, depending upon the jurisdiction, the court may apply the Fairfax or Harrisonburg guidelines, a different set of guidelines, or no guidelines at all.
Tax Consequences of Spousal Support
In general, spousal support payments are taxable income to the payee and tax-deductible by the payor. This is an important consideration in any spousal support case, especially given the fact that the parties are usually in different tax brackets.
Take for example a spousal support award of $2,000 per month from Husband who is in the 35% income tax bracket, to Wife who is in the 25% bracket. Assume that $2,000 per month in spousal support will be taxable income to Wife and tax-deductible by Husband. Wife will be paying $500 per month in income tax on that spousal support ($2,000 x .25), while Husband will be “saving” $700 per month in deductions ($2,000 x .35). So what does that $2,000 per month really amount to for each party? The answer is: $1,500 after taxes to Wife ($2,000 – $500 income tax) vs. $1,300 after taxes from Husband ($2,000 – $700 deduction). Given the parties’ different tax brackets, it is essentially costing Husband $1,300 per month to give Wife $1,500 per month.
But when are spousal support payments tax deductible? The Internal Revenue Service (IRS) rule addressing this question is on the surface quite clear. In Publication 504, the IRS states that alimony payments are tax-deductible by the person paying alimony, and must be included as income by the spouse receiving the alimony payments. “Alimony” in Virginia is simply called spousal support, but unfortunately it is not that easy. The IRS for tax purposes has their own definition of alimony, and some of the payments that fall under their definition of alimony may come as a surprise.
For a payment to qualify as alimony for tax purposes, (a) the payment must be in cash (including check or money order, and excluding property transfers); (b) the payment must not be designated as a non-alimony payment; (c) the parties must not be members of the same household; (d) there must be no liability to make the payment after the death of the receiving party; and (e) the payment must not be treated as child support. This definition clearly includes spousal support as alimony and clearly excludes child support and division of funds in a joint bank account.
But what about paying the other party’s expenses? The IRS says cash payments to a third party on behalf of your spouse can be alimony if they meet the alimony requirements above. An obligation to make your spouse’s car payment, or continue paying your spouse’s medical expenses, if made in cash to the lender or the doctor, would be alimony. The paying party would be within their rights to deduct those payments from their gross income at tax time, and the receiving party would be required to include them in his or her income. Potential discrepancies between former spouses’ tax returns could turn up in an audit and cause serious problems with one or both party’s returns.
Divorcing spouses do not always think of these payments to third parties as alimony because the payments are not labeled as such. Terms about payment of car loans or medical bills are typically not found in the spousal support section of a separation agreement or divorce decree, but as far as the IRS is concerned they are all alimony (if the above requirements are met).
Our Spousal Support Lawyers
The highly-rated family lawyers at Livesay & Myers, P.C. are intimately familiar with the factors considered by courts in establishing spousal support, and with the important tax consequences often intertwined with alimony. If you are facing a spousal support case in Northern Virginia, either as a payor or payee, we can help. Be sure to read our client reviews, then examine the profiles of each of our family lawyers to find the one who is the best fit for you.
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