On Thursday, March 11, 2021, President Joe Biden signed the $1.9 trillion American Rescue Plan into law in an attempt to further combat the disastrous financial impact as a result of the Covid-19 Pandemic. One of the most talked-about features of the American Rescue Plan is the third round of stimulus payments (aka “Economic Impact Payment”) which will be sent directly to taxpayers. As with the previous rounds of stimulus payments, the amount you receive is dependent on your adjusted gross income. To determine if you may be eligible to receive the third stimulus payment, click here.
For the third stimulus payment, eligible taxpayers will receive up to $1,400 for individuals or $2,800 for qualifying married couples, together with $1,400 for each dependent. Unlike the first stimulus payment, eligible taxpayers will receive a check for all of their dependents claimed on their tax return whereas the first stimulus payment applied only for dependents under the age of seventeen (17).
While one would assume that the third round of stimulus checks that are being dispersed creates more good than harm, this may not be the case for parties that have just finalized their divorce or are going through the divorce process. Instead, the third round of stimulus payments potentially adds to the list of battles for parties and their attorneys to fight over. We previously addressed some of the potential issues that may arise for those parties who have recently divorced or are in a pending divorce action in our blog post discussing the first round of stimulus checks. Those same issues in that blog post with respect to the first stimulus payment may also apply to the third stimulus payment. However, the third stimulus payment has the potential to create more issues as a result of the change of the dependency requirement.
For parties in a pending divorce action that may be eligible for the third stimulus payment one of the main issues that may arise is how parties are going to equitably distribute the money received for claimed dependents. The first stimulus payment only provided $500 for a dependent child who was under the age of seventeen (17). In contrast, the third stimulus payment provides that eligible taxpayers are to receive $1,400 per dependent claimed on their tax return regardless of their age. Based on this, eligible parties with three (3) dependents could receive $4,200 ($1,400 per dependent). Ultimately this means there is more money to be fought over in a pending divorce action, creating the potential for more problems. If parties cannot determine on their own how the third stimulus payment will be equitably distributed, which includes any money they may receive for their claimed dependents, they will need to seek out the assistance of their 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. If you need legal assistance, Hanna Kirkpatrick can be reached at 516-393-8295 or firstname.lastname@example.org.