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 The change came in Public Law 115-97, which repealed 26 USC 71, the section that had governed the tax treatment of alimony, and unlike much of that act it has no sunset date.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 part of those old rules. How it applies to a given stream of payments is a question of federal tax law that this post does not restate. Have a tax professional apply it before you change alimony paid under a pre-2019 instrument.
So the rule can reach a Georgia payer in one situation only: alimony paid under an instrument executed before 2019 that has not opted into the new law. A decree entered after 2018 is outside the old rules altogether, recapture included.
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!