Revisiting the Tax Treatment of Alimony

37 Pages Posted: 20 Mar 2023

See all articles by Tessa Davis

Tessa Davis

University of South Carolina School of Law

Amy Soled

Rutgers, The State University of New Jersey - Rutgers Law School

Jay A. Soled

Rutgers University

Date Written: March 14, 2023

Abstract

For over half a century, payers could deduct alimony payments while, conversely, recipients were required to include them in their income. The seeming symmetry of each dollar deducted being paired with a dollar included appears neatly balanced and consistent with the general tax principle of taxing accretions to wealth. Yet the superficiality of this coherence belied the more complex reality of the tax treatment of alimony as an area that confused taxpayers while simultaneously frustrating core elements of tax policy.

As part of the Tax Cuts and Jobs Act of 2017, Congress upended the tax treatment of alimony, making it neither deductible for the payer nor includable by the recipient. The legislative history regarding the need for this reform is virtually nonexistent. To fill this important gap, this article offers rationales for this legislative initiative. It then argues that this change appropriately places the tax responsibility on the payer and, by doing so, enhances tax compliance while easing administrative tax reporting burdens.

Suggested Citation

Davis, Tessa and Soled, Amy and Soled, Jay, Revisiting the Tax Treatment of Alimony (March 14, 2023). Kansas Law Review, 2023, Rutgers Law School Research Paper, Available at SSRN: https://ssrn.com/abstract=4388779

Tessa Davis

University of South Carolina School of Law ( email )

1525 Senate Street
Columbia, SC 29208
United States

Amy Soled (Contact Author)

Rutgers, The State University of New Jersey - Rutgers Law School ( email )

217 N. Fifth Street
Newark, NJ 08102
United States

Jay Soled

Rutgers University ( email )

1 Washington Park
Newark, NJ 07901-1825
United States
(973) 353-1727 (Phone)

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