On March 30, 2020, in an attempt to lighten the financial burden that COVID-19 is reaping throughout the world, the President signed into law a 2 trillion dollar stimulus package. One of the key components of the stimulus package is sending funds directly to taxpayers. The amount that will be provided is dependent on your adjusted gross income and family size. Those who qualify based on their adjusted gross income will receive the full payment of $1,200 per adult and $500 per dependent child under the age of 17 years old. If you have yet to file your 2019 tax returns, as the deadline has been extended to July 15, 2020, the IRS will use the information from your 2018 tax filings to calculate your stimulus check payment. For more information on how much you may be eligible to receive, click here. For those who provided their bank information for their tax filing, the IRS will use that information to directly deposit the stimulus payment. If you did not provide your bank information on your tax filing, the IRS will be sending you a check with the stimulus payment.
With the first wave of stimulus checks being issued on April 15th, many attorneys and parties will begin to battle over how the stimulus payment should be divided for those who have recently divorced or are in a pending divorce action.
For those who have recently finalized their divorce, they may encounter a situation where their last filed tax return was a joint return and as a result the stimulus money has been deposited into an account which is now owned exclusively by one party. This is a situation which may require the assistance of counsel to ensure that the proceeds are shared in an equitable manner.
An additional issue that may arise for individuals that have recently finalized their divorce is how they should split the portion of the stimulus payment for an eligible child or children of the marriage. This is an issue that may have varying arguments as to how the proceeds should be divided. For example, one may argue that the funds should be split in proportion to the Child Support Standards Act percentages. Others may argue that the parent who has the children the majority of the time should receive the entirety of the portion of the stimulus payment paid for an eligible child or children. In the event that you and your ex-spouse are unable to resolve this issue, you may want to seek the assistance of counsel.
If you have been divorced long enough and have filed an individual return, you will receive your own stimulus check based upon your adjusted gross income on your last tax filing. If you claimed your child as a dependent on your last tax filing, you should be the one to receive the $500 stimulus payment for each eligible child. However, this may become an issue as parties tend to rotate claiming a dependent child on their tax filings each year. Is it equitable to allow only one parent to receive the entirety of the stimulus payment under such circumstance? The courts will likely need to address this in the future.
Another question is who receives the stimulus payment if the parent who claims a child as a dependent in even years only filed a return for 2018 and the parent who claims a child as a dependent in odd years filed a return for 2019? Will each parent be receiving the $500 stimulus payment or will the parent who filed their 2019 return receive the stimulus payment for the child? Once again, the courts will likely need to address this in the future.
For those who have a pending divorce action, tax refunds are typically treated as a marital asset to be equitably distributed between the parties if they were earned prior to the date of the filing of the divorce action. Therefore, how the stimulus payment will be equitably distributed between the parties will have to be determined on a case by case basis with the assistance of counsel and/or guidance from the Court.
The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you. Readers of this article should seek specific legal advice from legal counsel of their choice. In the event that you fall into one of the above categories and need legal assistance in securing your portion of the stimulus payment, please contact Marissa Pullano at 516-393-8297 or mpullano@jaspanllp.com or Hanna Kirkpatrick at 516-393-8295 or hkirkpatrick@jaspanllp.com.