Are you and your spouse living apart? Are you wondering where your stimulus check will land? What happens if your spouse takes your check? And do parents have to share stimulus money received for the children? Why did we each get stimulus checks for the same child? Learn the answers to these questions and more!
Yes . . . the pandemic has been a big gray cloud over most of us, but there has been a small silver lining: the government stimulus payments!
Stimulus payments are checks sent to taxpayers by the U.S. government to help stimulate the economy by providing people with extra money to help boost consumption—thereby increasing revenue among retailers and manufacturers.
So far, the government has approved three pandemic stimulus payments:
The first stimulus payment was provided via special tax rebates of $1,200 per adult and $500 for each qualifying child (living with a parent, under age 17). Individuals earning less than $75,000 qualified for the payment, as did married joint filers earning less than $150,000.
Eligibility for the payment was based on 2018 and 2019 tax returns, but is a credit against the tax payer’s 2020 income tax return.
The adult stimulus payment: This means that if you were married in 2018 or 2019 and qualified for the stimulus payment, you should have received one in approximately March 2020 for $2,400 ($1,200 for you and $1,200 for your spouse). These payments were automatically deposited into the bank account on file with the IRS if you received direct deposit of your tax refunds. If you do not have banking information on file with the IRS, the checks were mailed to you at the address on your tax return.
If you and your spouse were married in 2018 or 2019 but living apart or already divorced by the time the payments went out in March 2020, it is possible that one spouse received both checks: Either the spouse still living at the address on the parties’ tax return or the spouse still using the parties’ checking account. In such instance, it would be fair for the spouse receiving both payments to forward $1,200 to his or her ex-spouse.
The child stimulus payment: If you were divorced in 2018 or 2019 but met the income eligibility requirements and had a qualifying child in one of those years, you should have received a $1,200 payment for yourself and a $500 payment for your child. You received the $500 payment for your child because you claimed him or her as a qualifying dependent on your tax return.
If you alternate the dependency exemption for your child with your ex-spouse, it is possible that you each received a $500 stimulus payment for the same child. How is that possible? Because the government looked at two years of tax returns to determine eligibility. So, if you claimed the child in 2018 and your spouse claimed the child in 2019, the government likely based each of your stimulus payments on whichever tax return (2018 or 2019) would maximize your stimulus checks: In this case, 2018 for you and 2019 for your spouse.
Authorized on December 29, 2020, the second round of stimulus payments were mostly received in early 2021. The payments gave $600 to individuals and $1,200 to married joint filers and $600 for each qualifying child—again, only those under 17 years of age.
Eligibility for the second round of payments was based only on 2019 tax returns but, again, is a credit on the 2020 tax return.
This means that if parents were divorced when the second stimulus payment was made, only the parent who claimed the child in 2019 received a $600 payment for the child. However, the other parent may still be eligible to claim the stimulus tax credit on his or her 2020 return. Talk to a CPA or other professional tax preparer to find out what your options are.
Again, as with the first stimulus payment, it is possible one party received both parties’ stimulus payments if they shared an address or bank account with the IRS in 2019 and it would be reasonable for the recipient party to give $600 to the other party.
The U.S. Treasury began making the third round of payments on March 12, 2021. They are again being made via direct deposit or via check and even debit card (for those with no banking information on file with the IRS).
The third stimulus payment is for $1,400 per person—this includes the taxpayer and any dependent claimed by the taxpayer not just those under age 17. The income eligibility requirements also changed for the 3rd payment. Single filers must earn less than $80,000; head-of-household filers must earn less than $120,000; and joint married filers must earn less than $160,000.
The IRS will base eligibility for the third payment on either your 2019 or 2020 taxes—whichever is available when it determines eligibility. Therefore, if you qualify based on your 2020 taxes, but do not qualify based on your 2019 taxes and do not receive a payment because you did not file your 2020 taxes before your eligibility was determined, you can still claim the payment on next year’s tax return when you file in 2022.
As with the first two stimulus payments, round three might create confusion around who the payments are for and what they are based on—and who has a right to claim any unreceived payments next year. These are all issues that are being dealt with on a daily basis in your county courthouse right now. The court can consider the payments in the broader context of your divorce action—we are often seeing the courts order parties to apply the payments to marital debt or to pay the Guardian ad Litem. So, as is the case with the rest of your assets: If you and your spouse cannot agree how to handle or divide your stimulus payments, the court will decide for you.
Children 17 or older did not qualify for a stimulus payment in March 2020 or January 2021 even if their parents claimed them as dependents on their tax returns because they were students or disabled. As a result, many young adults were not included in the first government stimulus package. These people generally ARE eligible for the third payment.
Many people, such as college students, who did not receive the first or second round stimulus payment are still eligible to claim it on their own tax returns—and will receive it as a refund.
Don’t wait to ask questions about how to manage your stimulus payments. If you are uncertain how much you should receive or whether you are eligible and how all the pieces fit into your divorce puzzle, please contact us today for a 100% confidential consultation!
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