A new round of COVID-19 stimulus checks was approved in late December by Congress and checks for $600 for every eligible adult and child began being distributed soon after. What happens if you and your spouse are separated, but not divorced? What if you are divorced, but had filed jointly on your taxes for the previous year?
Our Monmouth County divorce lawyers work with our clients to ensure details like this are either mediated right away or addressed later in divorce settlement (depending on our client’s priorities).
Let’s start first with the fact that however you received the first stimulus check – direct deposit, mailed check or debit card – will be how you receive this newest round of payments. You may recall that the first stimulus check of $1,200 per eligible adult and $500 per child under the Coronavirus Aid, Relief and Economic Security (CARES) Act had a rocky rollout with numerous delays in payment for people who did not have their bank account information on file with the IRS. (This was a widespread problem for people receiving Social Security.)
The IRS website portal to update one’s bank account information has either been unavailable or glitchy, but officials told CBS News these issues were being worked on. Payments are supposed to be automatic for those who filed a 2019 tax return, as well as for those who receive Social Security benefits, Railroad Retirement benefits or Supplement Security Income and Veterans Affairs beneficiaries who did not file tax returns. Those who had accessed the Non-Filers tool as of Nov. 21st last year (a platform created so that those who don’t normally file taxes could access a payment) should receive automatic payments as well.
The payments are not taxable because they are not considered earned income. The bipartisan agreement allows for up to $600 for a single person who earned up to $75,000 and $1,200 for married couples who earned up to $150,000. Children under 17 will receive $600. Children 17 and older are not eligible, as they are considered “adult dependents.” This includes many college students (and possibly seniors) and some disabled people.
Ultimately, more people are eligible for funds this second round than were the first. For example, the first round excluded couples who filed jointly if only one of them had a Social Security number (unless they were a member of the military). The new plan changes that, allowing homes with a mixed-status of American citizens to receive checks.
But what about separated and divorcing couples? As our Monmouth County divorce lawyers can explain, it’s not likely you’ll be able to stop a payment from being made if you filed your taxes together jointly in 2019. The real questions are whether both spouses are entitled to their own stimulus money, and how it should be divided if there are children involved.
The answer is that each spouse is entitled to his/her own stimulus money, though it may not be paid out individually by the government if you filed joint taxes in 2019. Payments for children will be remitted to whoever claimed them on their 2019 taxes. (If you didn’t file 2019 taxes, 2018 would apply.) For couples who have since been legally divorced, you have three options:
- Negotiate a fair plan with your ex-spouse. This only works if you are on speaking terms and trust him/her to be honest and fair with you. Keep written documentation of whatever agreement you reach and receipts.
- Contact the IRS. It is not clear if you’ll be able to stop the payment before it’s deposited, and they are not known for being the most responsive agency, but it may be worth a try.
- Call your divorce lawyer. If an agreement can be mediated swiftly without going to court, this is probably the best option. If necessary, we can pursue legal action.
As far as separated and divorcing couples, understand that no matter how “over” this marriage you are, the law still sees you as married until the divorce is finalized. But that does not mean only one spouse is entitled to all the money. No matter whose name is on the account that receives the stimulus money, those funds are likely considered marital assets, which means they would be subject to equitable distribution in a divorce, per NJRS § 2A:34-23.1. This will include stimulus payments based on your 2019 joint tax return. It is inadvisable for one spouse to misappropriate or fail to disclose receipt of federal funds, as it could likely result in much bigger consequences.
While these payments are a welcome relief for many households, the aren’t likely to significantly shift the course of any divorce. They can and should be included in any ongoing mediation talks (especially if kids are involved), but if at all possible, this may be one of those things you and your ex try working out on your own. Be sure to get proof of any such transaction or agreement in writing.
If you and your ex-spouse are not on speaking terms, a divorce lawyer can help.
Call Rozin|Golinder Law, LLC today at (732) 810-0034 for a free and confidential consultation.