When a marriage dissolves there are tax consequences for everything from distribution of property to custody of the couple's children. The current tax system for alimony and child support strengthens the possibility of financial devastation. Under the present system, alimony and child support have opposite tax treatment. Many complicated rules have been added to distinguish between alimony and child support, which will be discussed later in this paper. There must be a simplification of the present law so that the average divorced taxpayer will be able to understand and implement the rules with or without sophisticated tax counsel or an amicable relationship with his or her ex-spouse. This goal can be achieved by treating alimony and child support the same for tax purposes. This viewpoint has its critics as well. However, this paper will show that many of the reasons advocated by those who disfavor this type of tax treatment are outdated and unpersuasive. Although no system of taxation is without flaws, taxing both alimony and child support to the recipient will create the best possible method of divorce taxation. This paper will advocate this method of taxation by first examining the history of the tax effects of divorce, then stating the problems with the current system, and finally discussing in depth the benefits and consequences of taxing the recipient on both alimony and child support.
Note, Change Is Needed: The Taxation of Alimony and Child Support, 48 Clev. St. L. Rev. 361 (2000)