What is Alimony Recapture?

The alimony recapture rule is used by the IRS to prevent alimony payers from taking advantage of the tax deductibility of alimony. There are two things you need to know about the alimony recapture rule: Figure out if the alimony recapture rule applies to you. If it does, determine the recapture amount which you must include in your income. When Alimony Recapture Applies Alimony and property division are two separate parts of a divorce. These two transfers are treated differently for tax purposes. Alimony is deductible by the alimony payer and included in the income of the alimony payee. Property transfers are not deductible and typically have no tax consequences. If you give a large amount of alimony in the first year, and then have significantly lower alimony payments in the following years, the IRS may think that you are disguising a property settlement as alimony in order to get a tax deduction. Here’s when the alimony recapture rule applies: The alimony you pay in the…

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