Division of government issued Stimulus payments between separated or divorced parents
If you are a parent who shares custody or alternates years in which you can claim your child for taxes, you may be asking yourself whether you are entitled to any portion of the second round of stimulus payments were recently issued under the COVID-19-Related Tax Relief Act of 2020. Know that you are not alone in this question. Many parents are finding themselves in the scenario where they have been stretched-thin due to pandemic related parenting concerns but find that the stimulus check was issued to the other parent. Unfortunately, the answer to whether that parent must share the payment they received is not a simple one.
Ample news coverage has been devoted to whether government-issued stimulus payments will be issued and in what amount, but much less attention has been given to determining how those individual payments impact unmarried or divorced parents who file taxes separately from a child’s other parent. Unfortunately, local courts too have offered differing guidance on which parent is entitled to the funds and whether it should be divided. The answer is usually impacted by the language in the parents’ existing parenting plan or other court order which directs the allocation of the existing tax credit. Depending on what your current parenting orders say, it is most likely best to reach an agreement with your co-parent about the division of the payment. However, this will vary depending on your specific orders and we highly recommend consulting with an attorney to determine your best course individualized of action.
There is hope for those parents who did not receive a stimulus payment for their dependent children either in the first or second rounds of payments or had the payment distributed to the other parent. In certain scenarios, the parent who did not receive the initial stimulus payment may still be able to get a credit through their 2020 tax return. Your tax professional may be able to assist in whether you qualify for a tax credit under either of the Acts. In many cases, the credit can apply even when the other parent received a full stimulus payment for the same child or children.
In addition to the division of the payments, one thing that is important to note for parents who are subject to child support orders is that the first round of stimulus payments was able to be garnished toward child support arrearages, but the second round of payments are not able to be garnished for this purpose. Therefore, the child support recipient (Obligee) will not see an increased child support payment from the second round of stimulus checks even though they might have received credit to their child support account earlier in 2020.
If you have more questions about how your existing parenting orders may affect future existing or future government issued stimulus payments, please do not hesitate to contact our office to schedule a consult with one of our family law attorneys.