Many spouses are experiencing confusion and conflict when it comes to Stimulus Checks that were intended to provide financial relief. Economic Impact Payments (Stimulus Checks) authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) have been disbursed, but often not equally among 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 kids.
Either tax relief or conflict will come next.
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. Survey says: work it out.
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 for your co-parent by sharing the child portion of your Stimulus Check equally. For others, the funds are mutually agreed upon to go to the spouse 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 peaceably collaborate with your co-parent.
The Aurit Center for Divorce Mediation is here to help you resolve any issue via online mediation from the comfort of your own home.
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.
Kristyn Carmichael is a Professional Divorce Mediator, Arizona attorney, and Assistant Director of Mediation Services at The Aurit Center for Divorce Mediation.