On March 30, 2020, the Treasury Department and the Internal Revenue Service announced the distribution of stimulus package payments to account for the coronavirus pandemic. When it comes to this tax stimulus and divorce – there are often some questions.

What is the Tax Stimulus?

Payments are intended for taxpayers only, therefore, most qualifying recipients must have a social security number. There may be a minimal exception for members of the military.

Qualifying single adults who have an adjusted gross income of $75,000 or less will receive $1,200. Married couples with no children earning $150,000 or less will receive a total payment of $2,400. Taxpayers filing as head of household will receive full payment if they earned $112,500 or less. Those with dependents age 16 and younger will receive an additional $500 per dependent.

If your income is higher than the thresholds listed, then your payment will be reduced $5 for each $100 over the threshold until it stops altogether for single people earning $99,000 or more, or married couples without children who earn $198,000 or more.

You will not receive payment if someone claims you as a dependent, even if you’re an adult.

What If I Was Married For The Applicable Tax Filing, But I Am Separated From My Spouse Now?

Funds will be direct deposited based on the bank information from your 2019 tax filing. If you have not filed for 2019, then your 2018 filing will apply.

If you filed “jointly” with your spouse for the 2018 tax year, but have separated from your spouse since filing, then it is best to file your 2019 taxes as soon as possible. You will need to notify the IRS of your updated status of “separated” or “single”.

It is not likely that the IRS will have updated information for couples who have separated since their 2019 tax filing. Couples who filed jointly for the 2019 tax year but separated after filing, may need to coordinate division of the stimulus funds. If you cannot coordinate with your spouse, then seek an attorney to divide the funds appropriately. The IRS will be sending a paper notice in the mail detailing information about where your payment ended up and in what form it was made.

How Are The Payments For Children Allocated To Co-Parents?

For each qualifying child age 16 or under, there will be an additional payment of $500. The stimulus payments are based upon the 2019 tax filing. This means that if you claimed your child on your taxes in 2019, then you are likely to receive the $500 benefit for each child that you claimed as a dependent. If you have not filed taxes for 2019, then you should refer to your 2018 tax return.

The $500 stimulus payment for each child will go to the parent who claimed the child as a dependent in the most recent tax return.

Will I Receive Payment If I Am Behind On My Child Support Payments?

No. The Coronavirus Stimulus Bill has not waived offsets for past due child support. This means that if you owe back child support, then you may receive a decreased stimulus check or no check at all. If your payment is intercepted by the department of the treasury, then the funds will be given to the child’s custodial parent.

What if I was married with a high income in 2019 but didn’t qualify, but I will be single in 2020 and likely qualify for the credit?

The law says the rebate is technically an advance credit against your 2020 taxes (the return you’ll file in early 2021). Thus, it eventually will be based on your adjusted gross income, filing status, and kids under the age of 17 for 2020. That is as it should be—the financial situations of millions of people will be worse this year due to the unprecedented pandemic shock to the world economy.

But here is the win/win: If your tax year 2020 rebate turns out to be bigger than the amount you received this year, you will get the excess, which can generate a larger refund when you file next year.

However, you will not have to give back the payment if your rebate based on 2020 income turns out to be smaller than the amount you get this year. Thus, some filers may have an opportunity to strategically time their 2019 returns–if they have not filed already.

Tax Stimulus and Divorce: Stay in the Know

To check on the status of your stimulus check, visit the IRS website. If you believe that your spouse has inappropriately withheld your portion of the stimulus funds or you need more assistance regarding the tax stimulus and divorce, discuss options with your attorney. Need help with your divorce finances? Contact us today!