In the wake of the COVID-19 Pandemic, the Federal Government has passed the CARES Act which authorizes the distribution of stimulus checks to taxpayers. For those recently divorced or currently going through the process of divorce, these payments and what to do with them can become complicated.
Will I get a check?
For most taxpayers, you will automatically receive a stimulus check. You may qualify to receive a stimulus check if you:
- Are a U.S. citizen or U.S. resident alien;
- Cannot be claimed as a dependent on someone else’s return;
- Have a Social Security number (SSN) that is valid for employment (valid SSN); and
- Exception: If either spouse is a member of the U.S. Armed Forces at any time during the taxable year, then only one spouse needs to have a valid SSN
- Have adjusted gross income below an amount based on your filing status and the number of your qualifying children.
For more information, go to IRS.gov.
How much will I receive?
Qualifying individuals will receive $1,200 per adult and $500 per qualifying child, subject to the following Adjusted Gross Income limits:
You will receive the full $1,200 stimulus check if your AGI is:
- Taxpayers filing as Single: $75,000 or less;
- Taxpayers filing as Head of Household: $112,500 or less; and
- Taxpayers filing a joint return: $150,000 or less.
The stimulus check amount is reduced by 5% of the amount that your AGI exceeds those thresholds until it is $0. For example: if a couple (who do not have any children) who filed their taxes jointly has an AGI of $166,000 on their 2019 Tax Return, they exceed the threshold by $16,000. 5% of $16,000 is $800. You then subtract the $800 from the full stimulus amount of $2,400 = $1,600. This couple would receive a stimulus check in the amount of $1,600.
The government looks to the taxpayer’s status and AGI on their 2019 tax return. If you did not file a 2019 tax return, the government will look to your 2018 Tax Return. If you do not file taxes because you receive Social Security, SSI, or Railroad Retirement Benefits, you do not need to contact the IRS. They will use your 2019 Benefits information and will deposit your stimulus check the same way you receive your benefits currently.
I am currently going through a divorce, what do I do with the stimulus payment?
Since a divorce is currently pending, in Connecticut, you are bound by the Automatic Orders in addition to any other Court Orders on your case. You must keep the family’s finances as status quo. You and your spouse must discuss how and if you want to use your stimulus payment. If you both agree, you can use the funds how you agreed to. If you are not in agreement, then keep the funds in the bank account they were deposited into and do not touch them. Contact your attorney or mediator to help you come to a resolution.
What if I filed jointly with my ex-spouse?
If you are recently divorced, chances are that you may have filed your 2018 or 2019 Tax Return jointly. This may mean that your stimulus payment may go to into your ex-spouse’s bank account. Stimulus payments are distributed by direct deposit or paper check. The bank routing/account numbers and address that the IRS have are from your last filed Tax Returns. If your last filed Tax Return was filed jointly with an ex-spouse, and the account or address listed is one that is now in your ex-spouse's possession, your payment will go to your ex-spouse. You can do two things:
- Contact the IRS immediately to notify them of the change; or
- File your 2019 Tax Returns with the updated changes (if applicable).
If your payment is already in your ex-spouse’s hands, coordinate with your ex-spouse to receive your portion of the payment. If you and your spouse cannot work it out, a Court Order may be necessary and you should consult an attorney.
I owe child support; will I receive a stimulus check?
The CARES Act has not waived delinquent child support payments. This means that if you owe backed child support, you may receive a reduced stimulus payment or none at all. The money withheld from your stimulus payment will be rerouted to the parent who is owed the child support.
Will I receive the extra $500 per dependent child?
The IRS will distribute $500 per qualifying child to the taxpayer who claimed the child(ren) on their 2018 or 2019 Tax Return. If one parent receives the credit for the children while the other parent does not, we encourage the co-parents to work together to use the funds for the benefit of the children. Some examples include:
- Children’s daily expenses;
- Education expenses;
- Children’s college savings account; or
- If one parent has lost their income, the funds may be best used for the children’s food when they are at that parent’s house.
Before filing any motions in court, you should try and reach a mutually acceptable resolution. Courts are still closed for non-emergency family matters and it could take months before your motion is heard.