During this challenging time, many separated spouses are experiencing unexpected confusion and conflict around the Stimulus Check, which was intended to provide financial relief, as authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Economic Impact Payments (Stimulus Checks) have been disbursed, but often not equally amongst divorced or separated couples. Other than certain exceptions, primarily based upon income, the Stimulus Check is paid as follows:
Individuals – $1,200
Couple Filing Jointly – $2,400
$500 for each additional child claimed on your taxes
So why the discrepancy?
Imagine that for 2018, you were married and thus filed your taxes jointly. In 2019, you divorced, but have not yet filed your 2019 taxes separately. In this common scenario, the Stimulus Check has likely been deposited in one spouse’s account per your 2018 taxes, rather than being equally distributed 50/50 between spouses. Additionally, one parent likely received 100% of the stimulus money for the children.
So what to do?
Ideally, you and your former spouse have an open line of communication and can work together to find a solution. You may simply divide the check equally. In most cases, your Divorce Decree has a clause regarding taxes, including the sharing of any tax refunds or liabilities for a set period of time. These clauses may provide guidance to you and your former spouse as you try to resolve this issue.
If you are not able to reach an agreement, you can use online family mediation to resolve the issue quickly and inexpensively. Alternatively, a parent could pursue litigation, however, the courts are backlogged, and it is unlikely a Judge will hear the case for months. For many couples, the financial relief of the Stimulus Check is needed now. And, the cost to litigate this issue would likely far exceed the amount in dispute. Thus, working out the issue amicably and through open communication is most beneficial, in regard to time and financial impact.
What about the stimulus money for my children?
The $500 stimulus increase per child is assumed to be directly associated with the Child Tax Credit that was claimed when you filed your taxes. Per your Divorce Decree, look to see who is to claim each child. The parent who claims each child would also, in theory, receive the associated stimulus money. On the other hand, for many, now may be an ideal time to show support to your co-parent by sharing the child portion of your Stimulus Check equally. For others, the funds may be mutually agreed upon to go to the parent who truly needs it most.
Parents are experiencing a great amount of stress; emotionally, physically, and financially. Sharing your Stimulus Check could show goodwill towards your co-parent and help you both put your children first while surviving this crisis. Now is a time to come together, rather than create tension and conflict. Considering the final destination of your Stimulus Check and keeping your co-parent in mind during this time of need is your opportunity to peacefully collaborate with your co-parent.
If you have specific questions or need advice about the tax implications of your stimulus check, visit (https://www.irs.gov/coronavirus/economic-impact-payment-information-center) or consult with your tax advisor.
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