The federal alimony recapture rule belongs to the old tax treatment of alimony, which since 2019 applies only to instruments signed before then.
What Changed in 2019
Under the 2017 federal tax act, alimony is neither deductible by the payer nor taxable to the recipient if it is paid under a decree, written separation agreement or support decree that was executed after 2018, or that was executed before 2019 and later modified with the modification expressly providing that the new law applies. The federal rule is stated in 26 USC 71 as amended by Public Law 115-97, and unlike much of that act it has no sunset date.
Who Still Lives Under the Old Rules
Alimony under an instrument executed before 2019 is still deductible by the payer and income to the recipient, so long as the instrument was executed before 2019 and the requirements of the pre-2019 law are met.
Where Recapture Fits
The recapture rule is one of those pre-2019 requirements. It sits in former 26 USC 71 and is aimed at front-loaded alimony, payments heavy in the first years after the divorce that then drop sharply, adding part of what the payer deducted back to his income. The thresholds and computation are in that section; have a tax professional run them before agreeing to alimony that steps down.
So the rule can reach a Georgia payer in one situation only: alimony deducted under an instrument executed before 2019 that has not opted into the new law. A decree entered after 2018 carries no deduction, so there is nothing to recapture.
One Trap in Modifying an Old Decree
A pre-2019 decree keeps its old tax treatment through a later modification unless the modification “expressly provides” that the new law applies, so whether a change opts in is a term to negotiate: it decides who bears the tax on every payment that follows.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!