The rollout of stimulus checks means more money for parents with dependents, but what happens when divorced parents disagree on who should receive the funds? Family Law attorney Carolyn Grimes has insights on how to handle stimulus check disputes.
How Much Will Families with Dependents Receive For Their Stimulus Checks?
Stimulus checks from the $1.9 trillion American Rescue Plan Act of 2021 are hitting the nation’s bank accounts. The amount varies, but if you had income below certain levels — $75,000 for individuals, $112,500 for heads of household and $150,000 for couples filing jointly — you would receive $1,400 per person as a direct deposit or mailed check. There’s also an additional $1,400 for each dependent claimed on the most recent tax filings.
The Question Is, for Divorced Families, Which Parent Gets That Stimulus Money?
“Whoever claims the child as a dependent on their 2019 tax return will receive the dependent stimulus payment, being paid in 2021,” says Grimes. “Therefore, divorced couples who jointly filed taxes as a married couple may run into issues over how to split the single deposit.”
If a married couple going through divorce finds themselves at odds over who gets what from stimulus payments, the issue is whether the stimulus money for the dependent children should go to the custodial parent, or the parent paying support and/or supporting the children wholly or in part, or if the stimulus payment should be divided between the parties. It is unlikely that a Court in Virginia could address a direct division of a stimulus payment but could probably consider whether the money would be considered as income in a child or spousal support case. It is not a large amount of money, so before considering any court action on stimulus payments alone, please consider the costs of a court hearing.
Will the Increased Child Tax Credit Cause Issues for Divorced Parents?
The Child Tax Credit introduced in the most recent stimulus package adds an extra layer of complexity, as it has been increased from prior year credits. For 2021, the Child Tax Credit was increased to a fully refundable $3,000 for children aged 6 to 17 and $3,600 for children younger than 6 for many families. The child tax credit is a direct credit against taxes owed, so it potentially increases refunds.
“In order to receive the Child Tax Credit, a party must claim the child as a dependent on his/her tax return/ the right to claim the child as a dependent is assignable between the parties under Virginia law, and can be a valuable benefit. Normally courts will split up the dependency exemptions if there are multiple children or alternate it yearly if there is only one child. Also, the ability to claim the Child Tax Credit is phased out at higher income levels. Some parties will argue for increased custodial time and thus an increased demand for the Child Tax Credit,” says Grimes.
Once a child is no longer a minor (under 18 years old) the dependency exemption is no longer assignable. For children over the age of 18, the normal IRS rules apply as to who can claim the child as a dependent, which require that the child lives with the person claiming them for over 50% of the year and that the person claiming the child provide over 50% of support for the child for the year. These clauses are important for dependent college-age children in particular.
When to Contact an Attorney
For more information regarding the American Rescue Plan Act of 2021 as it relates to child support and custody, please contact Carolyn Grimes.
About the Author
Carolyn Grimes is a partner at Wade Grimes Friedman Meinken & Leischner PLLC, practicing in all areas of family law including divorce, spousal support, child custody, child support, equitable distribution, retirement issues, and prenuptial agreements, among other areas.
Consistently named a ‘Best Lawyer’ (from 2014-2023), Ms. Grimes has also been honored as an AV Preeminent (2001-2022) and Gold Client Champion (2019-2021) by Martindale-Hubbell. In addition, she’s been named a Top Lawyer by Northern Virginia Magazine Magazine (2011, 2015, 2017, 2019, 2020, 2021), a Top Attorney by Arlington Magazine (2019-2021), and a Top Attorney by Washingtonian Magazine (2015) as well as many other top attorney designations.
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