What Divorced (and Divorcing) Couples Need to Know About Coronavirus Stimulus Checks

Many people are wondering how the stimulus checks from the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) will affect their family law case. Freed Marcroft is committed to providing resources about COVID-19 and how it impacts divorce and family law matters in Connecticut.

Please read on to learn more about how the CARES Act stimulus checks will be handled in your divorce.

Will I receive a stimulus check or is my income too high?

Under the law, individual adults will receive up to $1,200, while married couples will receive up to $2,400. Parents with children under 17 at the end of the tax year will receive up to $500 for each child.

The amount of stimulus checks — officially called “Economic Impact Payments” — starts to phaseout for those with an Adjusted Gross Income (AGI) of more than $75,000 ($150,000 for joint returns and $112,500 for heads of household).   Single filers with $99,000 AGIs, married couples filing jointly with $198,000 AGIs, and heads of household with $136,500 AGIs will not receive stimulus checks. Call your accountant or check line 8(b) of your form 1040 for your AGI. Once you have your AGI, here is a calculator to help you figure out your Coronavirus stimulus payment.

What happens if I haven’t filed my 2019 tax return yet?

For those that have not filed their 2019 tax return, the government will base the calculation on the AGI listed on the 2018 tax return.

People who haven’t filed their 2019 tax returns yet still currently have the option to file to make sure the government has their updated income and bank account information, as well as 2019 information about recent divorces, moves, births, and marriages. Talk to your divorce attorney and your tax preparer to determine the best option for you.

What are the nuts and bolts of divorce and tax filing status?

There are five tax filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child.

Tax filing status is based on a person’s marital status as of December 31 for any tax filing year. So, if you were married on December 31, 2019, you would likely file your 2019 taxes either married filing jointly or married filing separately.

I have a pending divorce case, who will get the check?

The check will go via direct deposit to the bank account that was provided to the IRS in your previous return. If you didn’t provide bank account information, a paper check will be sent by mail to the address that is on your tax return

If you last filed “married filing jointly,” the check will be sent to both of you and both of your names will be on the check. If you filed “married filing separately” and file two separate returns, you’d receive two separate checks made out in your respective names.

In general, if you have a pending divorce and anticipate a COVID-19 stimulus check, you should set up some time to discuss your options and make a plan with your divorce attorney.

(It may be possible to update your direct deposit information with the IRS, but do not do so without speaking with your divorce attorney. You want to make sure you do not violate Connecticut’s automatic court orders.)

We were married when we filed our 2018 taxes, divorced during 2019, and haven’t filed our 2019 taxes yet.  What will happen to our stimulus checks?

There’s no system to inform the IRS that you have divorced, so they will default to the tax filing status indicated on your most recent tax return — 2018 in this hypothetical. So, assuming your AGI doesn’t exceed the income limits, a couple who filed their taxes jointly last year will get a single, combined payment of up to $2,400.

Remember that people who haven’t filed their 2019 tax returns yet can still file to make sure the government has updated information about recent divorces. Talk to your divorce attorney and your tax preparer to determine the best option for you.

We divorced in 2020, and as part of our divorce court order, we are to file a joint 2019 tax return and share any refund received or taxes owed.  What do we do about the stimulus check?

Coronavirus stimulus check payments are actually advances on tax credits that taxpayers will be able to get on their 2020 tax returns. Consult with an attorney to review the specific language in your case to help interpret determine who is entitled to what with respect to the stimulus check and how best to handle it.

I have a custody case, who will get the portion of stimulus check allocated for the children?

The person who filed as head of household will receive the check. If you filed jointly with your spouse and listed your minor children, or if your custody situation has changed since your most recent tax return was filed, a family law attorney can explain your options.

What about people who owe back child support?

The stimulus law puts on hold other debts that typically lead to tax refunds’ being garnished, such as overdue student loans or back taxes. But not child support. The coronavirus money can still be garnished when people are overdue on those payments.

Next Steps

The divorce and family law legal team at Freed Marcroft can give you individualized guidance based upon goals and the circumstances of your particular situation. If you are interested in learning about Coronavirus and divorce more generally, please check out our COVID-19 resource page.

Freed Marcroft’s first step, the Goals & Planning Conference is designed to get to the heart of your problem and unveil your true goals for your life. Once we discover your goals for your life at the Goals and Planning Conference, we are able to take our all of our collective experience with divorce, law, the available ways to divorce, strategy, courts, judges, and other lawyers, and build a divorce, separation, or annulment customized for you.