What is the Recapture Rule?
If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. The reasons for a reduction or end of alimony payments that can require a recapture include:
The recapture rule forces the alimony payer, usually the ex-husband, to report as income the alimony payments he previously deducted, which means the ex-wife is entitled to reduce from income the alimony payments she previously received.
When does the Recapture Rule Apply?
The rule applies when the payments decrease or terminate during the first three calendars years post-divorce and:
1.) The total payments made in the third year decrease by $15,000 or more from the payments made in the second year; or
2.) The payments made in the second year and the third year are substantially less than the payments made in the first year.
Recapture Rule & Filing Taxes:
a) Including the recapture amount in your income: If you must include a recaptured amount in income, show it on Form 1040, line 11 (“Alimony received”). Cross out “received” and enter “recapture.” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN.
b) Deducting the recapture amount: If you can deduct a recaptured amount, show it on Form 1040, line 31a (“Alimony paid”). Cross out “paid” and enter “recapture.” In the space provided, enter your spouse's SSN or ITIN.
Exceptions to the Recapture Rule?
The Recapture Rule does NOT apply to the following:
If you need to speak with a family law attorney in regards to alimony, contact Adkins Law. Adkins Law has offices in Huntersville and Ballantyne for your convenience.
Step 1. Determine which payments you made qualify as alimony.
Payments that are NOT alimony: Not all payments under a divorce or separation instrument are alimony. Alimony does not include:
Requirements for a payment to be alimony:
General Rules for alimony payments:
Step 2. Mark down alimony payments made or received on your taxes:
a) How to Deduct Alimony Paid on your Taxes:
b) How to Report Alimony Received on your Taxes:
For more information go to https://www.irs.gov/publications/p17/ch18.html.
If you would like to speak with a family law attorney in regards to alimony, contact Adkins Law. Adkins Law has offices in Huntersville and Ballantyne for your convenience.
At Adkins Law, we believe in providing top-notch, quality legal services at affordable prices. If you need to speak with an attorney regarding a family law matter, traffic citation or issue, or for your estate planning needs, contact Adkins Law to arrange a consultation. Adkins Law has offices in Huntersville and Ballantyne for your convenience.
Adkins Law PLLC focuses primarily on family law matters such as separation, divorce, equitable distribution, alimony, post-separation support, child custody, and child support. We have locations in Huntersville and Ballantyne for your convenience. Please contact us if you need to arrange a consultation.
Alimony is support awarded to a dependent spouse. When a married couple separates, a claim of alimony must be instituted before the divorce is finalized or it is lost. In order to file for alimony, there must be a dependent spouse and a supporting spouse. This means that one spouse, the supporting spouse, must provide economic support to the other spouse, the dependent spouse.
The dependent spouse must be able to prove that he or she is truly dependent on the economic support of the supporting spouse. There can be a difference in income without such a relationship existing. If one spouse makes $55K per year, for example, and the other spouse makes $50K per year, a supporting / dependent relationship probably would not exist. If, on the other hand, one spouse makes $150K per year and the other spouse makes $35K per year, a supporting / dependent relationship would probably be found to exist.
Even if a supporting / dependent relationship exists, infidelity during marriage may effect alimony. If, for example, the dependent spouse cheats on the supporting spouse during their marriage, she is barred from alimony. If the supporting spouse, however, cheats on the dependent spouse during their marriage, alimony should be automatically be granted.
If you need legal advice for alimony in North Carolina, specifically in Mecklenburg County, please contact Adkins Law. Adkins Law is located in Huntersville NC, and primarily serves Huntersville, Cornelius, Davidson, Charlotte, and Mecklenburg County. Contact Adkins Law to speak with an alimony lawyer today.
In North Carolina, alimony may be awarded to a dependent spouse pursuant to divorce. Once an order for alimony is entered, it may be modified or vacated at any time upon a showing of changed circumstances by either party.
In North Carolina, the termination of alimony may be made if a dependent spouse remarries or engages in cohabitation. NCGS 50-16.9(b) states that “cohabitation means the act of two adults dwelling together continuously and habitually in a private heterosexual relationship, even if this relationship is not solemnized by marriage, or a private homosexual relationship.”
The statute continues to state that “[c]ohabitation is evidenced by the voluntary mutual assumption of those marital rights, duties, and obligations which are usually manifested by married people, and which include, but are not necessarily dependent on, sexual relations.”
What does this mean? It means that once an order for alimony has been entered in North Carolina, it may either (1) be modified upon a showing of a substantial change in circumstances, or (2) terminated upon the remarriage or cohabitation of the dependent spouse. Thus, if the dependent spouse begins living with another person, any alimony they receive may be terminated.
If you would like to speak to an alimony lawyer about modifying or terminating alimony in Huntersville NC or the greater Charlotte area, please contact Adkins Law PLLC. Adkins Law is located in Huntersville NC and primarily serves Huntersville NC, Cornelius NC, Davidson NC, Denver NC, Charlotte NC, Mecklenburg County, Iredell County, Gaston County, Cabarrus County, and the Lake Norman area. Please contact Adkins Law today to speak with an alimony lawyer in Huntersville NC.