If you’ve been watching the news or checking social media at all over the past few weeks, you already know that Americans will be receiving a stimulus payment (economic relief payment) to help ease the financial burden caused by COVID-19. How you filed your last tax return will determine both the payment amount and the way you receive it. To learn how much you can expect to receive and how to receive your payment as quickly as possible, check out my colleague’s post about the tax stimulus payments.
But what will happen to your economic relief payment if you are going through a divorce or separation?
The scenarios will look different depending on your situation. However, in each scenario discussed below, one issue remains the same: how the courts will disburse the payment between separated or recently divorced spouses.
In many divorce matters, the courts split tax returns between the parties as part of the divorce settlement. This stimulus payment would be no different. You just need to determine how that split will look. It may be an equal split where each of you gets half. Or, it may look a little different.
If you and your spouse can resolve the matter between yourselves amicably, that is the best path to take.
If you are working with an attorney, they can help you choose what to do. Although we have closed our physical office, the attorneys at Russell, Krafft & Gruber, LLP are ready to help.
Let’s dive deeper into what can happen in five different scenarios.
Scenario 1: My spouse and I have separated since filing our last tax return
Assuming you filed a joint return for 2019, the IRS will use both your incomes to determine your payment amount and will direct deposit your payment into the account listed on your last return as long as it remains open. Presumably, that is a joint account. If you have closed that account, the IRS’s Economic Impact Payments site will allow you to provide updated account information.
If you have not yet filed your 2019 tax return, you may be able to file it now as single or separate and have your status changed before the IRS issues the payment, although this is not guaranteed. Even if you have not filed your 2019 taxes yet, the IRS may still base your payment on your 2018 filing status and income.
Scenario 2: My spouse and I have filed for divorce since filing our last tax return
This scenario isn’t much different than the one above. If you previously filed a joint return, the IRS will use both incomes in calculating the amount and will deposit your money into whatever account you listed at the time.
Make sure you verify what account that is because there is a good chance that the payment will go into a jointly owned bank account or an account you have closed. If so, you should also update your banking information on the IRS’s Economic Impact Payments site.
Scenario 3: My divorce was recently finalized
For the recently divorced, how your stimulus payment will be calculated depends on the filing status of your last return. If your most recent tax return was filed individually, it should be smooth sailing for you as you and your ex-spouse should both get your separate payments.
If you filed your last tax return as married filing jointly, there is a good chance that the payment will either go into an account that has been closed or is now owned by either you or your ex-spouse individually. We recommend talking to your ex-spouse about how you are going to handle it. If that’s not an option or you can’t agree, reach out to an attorney for help.
Scenario 4: My spouse is behind on support payments through the Office of Domestic Relations
If your spouse or ex-spouse is behind on support payments, their stimulus payment may be reduced or they may not get one at all.
In this case, the Department of Treasury should deduct the stimulus payment of the spouse who owes support and redirect that payment to the spouse to whom the support is owed. If you think that you are entitled to this type of payment and have not received it, you may want to reach out to an attorney to discuss it in greater detail.
Scenario 5: Our last return listed an account that’s no longer correct
If you haven’t yet filed your 2019 return, do it now and update your account information as soon as possible! The IRS is working on an application that will be called Get My Payment. It is expected to become available by mid-April, so hopefully any day now! You should be able to access it also on the Economic Impact Payments page once available, so keep checking back!
If you’ve already received your stimulus payment and your spouse or ex-spouse is refusing to share it, you are not necessarily out of luck. Reach out to an attorney because there are things that can be done to ensure you get your fair share.
How do we divide the stimulus payments for our children?
The government will also be distributing stimulus payments of $500 for each qualifying dependent child. The child stimulus payments may create additional questions: How will this be distributed between the parties? What impact may this have on child support?
Unfortunately, we don’t have all these answers now, but we are keeping our eyes on all new developments. I will discuss how divorced couples can split the child stimulus payments in a future blog, so keep checking back!
We are learning additional information on these topics and more on a daily basis. All of the attorneys at Russell, Krafft & Gruber, LLP are busy blogging to keep our community informed. To stay up to date on the latest, please follow Lancaster Law Blog.
If you are facing an emergency that requires court intervention, whether it be a family law emergency, contract dispute, landlord/tenant matter or something else, contact Russell, Krafft & Gruber, LLP to discuss your options with one of our attorneys. Although we have closed our physical office, our virtual office is open for business.