Question

Which of the following statements is correct regarding the recapture rules for alimony?

A. Alimony may need to be recaptured every three years following a divorce or separation

B. Alimony may need to be recaptured during any three-year period when alimony payments vary

C. Alimony may need to be recaptured based on a rolling three-year average

D. Alimony may need to be recaptured during the first three years that it is paid pursuant to a written divorce agreement

Answer 1

Alimony Recapture Rule : A reduction in payment after every three years does not require the need for recapture. A general rule is that a recapture is required in third year after the person (a taxpayer) makes alimony payments under a divorce agreement , if any of the following conditions satisfy:

1. Decrease in third alimony by more than $ 15,000 by from the second year.
2. Alimony decreases significantly in second and thrid year from the alimony paid in first year.

Therefore, the correct option is : D. Alimony may need to be recaptured during the first three years that it is paid pursuant to a written divorce agreement