Somebody has not been telling the truth…

alimony payments and taxes

Based on tax law that has been in place since 1986, alimony payments are deductible for the payer and represent taxable income for the recipient.  According to the Internal Revenue Service, 361,000 taxpayers claimed they paid a total of $9.6 billion in alimony in the 2015 tax year.  Yet, only 178,000 taxpayers reported the receipt of alimony in the 2015 tax year. 

It looks like Congress decided to fix this “alimony gap”.  Beginning with divorce decrees signed on or after January 1, 2019, alimony will no longer be deductible for the person paying it, nor will it be reportable income for the person who receives it.  The Congressional Budget Office estimates that this change will increase government revenues by $6.9 billion over the next ten years.  One has to wonder if this change would have been made had people been a bit more honest in completing their federal income tax returns.