14 Apr The Fine Print on Those Coronavirus Stimulus Checks

Congress has passed a much-needed stimulus package; however, they failed to consult experts in divorce and family law.  The package is designed to boost the economy, but it doesn’t take into consideration the fact that not every family has two parents and their children living under the same roof. As a result, there are definite losers when it comes to the stimulus package. Specifically, there are parents who will not receive the promised $500 per child, including…

• The Recently-Divorced or Estranged
  The IRS stimulus checks for children are based on the most recent taxes filed. As the tax deadline for 2019 has been extended until July, the most recent tax returns for many people are the returns for 2018. For parents who have gotten divorced or separated since the filing of their 2018 returns, their status with the IRS remains the same. The government will send the checks or direct-deposit the funds based on old information. This could mean that the account has been closed, the address has changed, or the parent receiving the funds is the non-custodial parent. Fortunately, many of our clients are able to work together on this matter, directing the payment to the appropriate parent, or equally dividing the $500 payment. However, for those who are less cooperative, there is little that can be done in the short term, as Kentucky state courts are closed, except for emergencies.
• Parents Who Split Custody
  The trend in Kentucky is for parents to divide parenting time equally, and to alternate claiming the child on their taxes. Many of those people will be out of luck. As the federal government will be making the payment to the party that had the child as a dependent on the most recently-filed return, one parent will get the check. The other party gets nothing. Once again, there are good reasons for the 50/50 parents to divide the check equally; however, there is little to do in the short term for a parent that isn’t lucky enough to have the dependency deduction on the last filed return.
• Parents With Older Children
  Inexplicably, Congress failed to consider older high schoolers or college students when drafting the new law. The $500 checks only go to parents of children under 17. If you have a 17-year-old right now, you will get nothing in the way of a stimulus bonus. Have a college kid that was sent home halfway through the semester? Nothing. Those older students will typically not have filed their own independent returns, so they will not get the check for individuals.
• Parents With Infants
  If parents have not filed a tax return claiming the child as a dependent, the child doesn’t exist for purposes of the $500 stimulus amount. The result is that no child born in 2020 is eligible, and many children born in 2019 will also be invisible for this purpose. It doesn’t matter to the federal government whether the child has a Social Security Number or not. Fortunately, there will be a credit on next year’s tax return for the oversight. However, in the short term, there will be no relief.

If you have any questions about Stimulus Checks and Custody, Child Support, Maintenance or other Family Law financial topics, please know that we are in the office every day during this crisis.
Give us a call. We are happy to help.