Alimony Recapture: What You Need to Know

If alimony is front-loaded, meaning that the payments are substantially larger in the first year or two, the alimony recapture rule could be triggered. The rule provides that if the amount paid in the third year plus $15,000 is less than the amount paid in the second year, or when the payments in the second and third years are averaged and this average plus $15,000 is less than the payments in the first year, the paying spouse must “recapture” the excess alimony from the previous years. Those payments that were previously deducted will have to be reported and recaptured in the third year post-separation.