Stimulus Money & Family Law
On March 27, 2020, the US Government passed the Coronarvirus Aid, Relief, and Economic Security Act (CARES Act) and our office began receiving questions almost immediately after it was passed. Indiana has not issued any official stance on how monies should be divided between parents, divorcing couples, child support, and other issues, but common sense and review of our current statutes can provide some guidance.
So what does the distribution of the stimulus monies mean for you, your children, child support and your family law case? We will answer all of that, but let's touch on some basics first. The basics will help you identify the amount(s) you are eligible to receive, how your amount(s) are determined, and receipt of stimulus monies.
The Stimulus Basics:
Based on 2018 or 2019 tax return (if you have not filed for 2018 or 2019, do so ASAP)
Stimulus monies are being sent by the IRS has a form of a tax credit.
You will not have to pay stimulus money back if you make above the threshold in 2020.
If you owe back taxes, you will still receive stimulus money.
If the IRS has your direct deposit information, you could see a deposit by mid-April. However, there is no firm date on delivery and receipt yet.
Annual income under $75,000 will receive $1,200
Annual income over $75,00 but under $99,000 will receive less than $1,200 (the final amounts range and no definitive answer can be found right now)
Annual income over $99,000 will receive $0
Annual joint income under $150,000 will receive $2,400
Annual joint income over $150,000 but under $198,000 will receive less than $2,400 (but again the amounts range)
Annual joint income over $198,000 will receive $0
Child(ren) under 17yrs old:
$500 per child, could be lower depending if income was greater than $75k for individual and $150k for married.
The stimulus monies will go to the parent who claimed the child(ren) on the most recently filed tax return.
If your income was too high in 2019 to receive stimulus monies, but it fell in 2020 to one of thresholds above, you would receive a tax credit in 2021, when you file your 2020 tax returns.
Currently Divorcing Spouse:
There is no Indiana law on how to handle the 2020 Stimulus money, but there is law on how to divide marital asset. As the stimulus money is based on either 2018 or 2019 tax filings, depending on the date of your filing for divorce, any court orders, and how each spouse filed their taxes the stimulus money could be considered marital property. If it is considered marital property, it goes into the marital pot and the Court will decide how it is divided. (Marital pot and what it is discussed in an earlier blog here: https://www.donnajamesonlaw.com/post/so-what-is-the-marital-pot-in-a-divorce)
However, if you need that money now and since courts are having to prolong cases due the COVID-19, the best advice I can offer is...come to an agreement on how to share the stimulus monies, especially if children are involved. Either talk to each other or talk to your attorneys, but coming to an agreement could be the fastest way to utilize the stimulus money if you are currently going through a divorce.
Again, there is no Indiana law on how to handle the division of the stimulus money, yet. This is new territory. Depending on your case, parties, attorneys, and court it could be months or even a year before the division of that money could be decided by the legal system. My best piece of advice is talk to the parent of your children.
In this incident though there is some idea as to who will receive the money, as most Courts have decided which parent claims the children each tax-year. It could very well be perceived as the parent who claimed them would get the entire child-related stimulus monies. But again, if you have an active case and the Court sees that you offer to divide the money with the other parent....you just earned some serious gold stars in the Court's eyes. If the check was in the other hand, would you not want that parent to do the same for you? We are all struggling right now. You can either work with the other parent and get relief or you can wait for the court to become involve and if you do that you will be waiting on the stimulus money.
One things I do want to touch on here is that if you owe back child support, the State of Indiana may be a able to withhold part or all of this money to pay your child support obligation. From the research conducted, it appears this may be one of the only reasons stimulus money may be withheld to pay a "debt".
The main point is to work together on this issue if you are unsure how the money should be divided between you and the other parent. It will be less of a headache and avoid the cost of legal fees. This is the time to practice good communication and co-parenting skills. Everyone is in this together.
Additional Resources and Information:
Calculate your Stimulus Money: https://www.cnn.com/2020/03/27/politics/stimulus-check-calculator/index.html
IRS COVID-19 Tax Relief Information: https://www.irs.gov/coronavirus (this has a TON of information, especially if you have a business, need to file your taxes, and tax help questions)
Per the IRS Website, if you receive Social Security benefits and are not typically required to file tax returns, you will not need to file a tax returned to receive a payment. The payment will be deposited automatically into your account. https://home.treasury.gov/news/press-releases/sm967
Per the IRS Website, if you typically do not file a tax return due to low-income you will need to submit a simple tax return to receive the stimulus money. However, the IRS says DO NOT DO THAT NOW, there will be a form and more updates on this shortly. Keep following this website https://www.irs.gov/coronavirus for further updates on when to file.