Many Americans are eagerly anticipating the federal relief check that was promised as part of the $2 trillion economic stimulus package passed on March 27. The legislation, which is the largest aid package in U.S. history, will provide financial assistance in the form of direct payments to most Americans in the amount of $1,200 for single individuals, and $2,400 to married couples earning up to $150,000 with an additional $500 granted per child.
But if your marriage is in the process of being dissolved in one of the estimated 806,400 divorce cases that are currently going on in the United States, then the question arises- who gets the check?
To answer that question you first have to look at your most recent tax filing. The stimulus checks, which are scheduled to go out within three weeks, will be distributed based on your 2019 tax return if you filed already. If not, your payments will be distributed based on your 2018 tax return. For various reasons, many divorcing couples have not have yet filed their returns for 2019, so the IRS will be looking at the return from 2018 for information. This is very significant for divorcing couples because it is likely that their situations have dramatically changed since the 2018 return was filed.
Not only will the previously filed tax return be used to calculate the amount of the stimulus checks, but it will also determine were the checks are deposited or mailed. In past government stimulus payments in 2001 and 2008, the money was delivered both through direct deposits and by physical checks in the mail. The problem for divorcing individuals is that who has control of the bank account and who is living at the last known address will likely have changed since the last filing. If they are involved in a high-conflict case, the spouse who does not have control of the account or the residence runs the risk that the other spouse will take the check and spend it for themselves before there can be an accounting for it.
A proposed solution may be to immediately file or amend your 2019 taxes to "married filing separately" so that you receive a separate check from the IRS. However, I don't think that is a reasonable option at this point. Although the IRS has extended the federal deadline for tax returns from April 15 to July 15, it is uncertain that your filing will be processed by the IRS in time before the checks are distributed. In addition, filing separately usually results in high overall taxes which may offset a large portion of the benefit of the payment.
Another point of dispute may arise in who gets the $500 per child portion of the check. Although there is no official guidance on this, the most likely answer is that it will be the person who claimed the child on the last tax return.
The ultimate answer to who gets part, or all of the stimulus check in a divorce is that the check will be characterized the same as any other marital asset is. In the State of Texas, the stimulus payment will be considered community property and therefore subject to division by the court. If you are in the middle of a divorce case and you want to get on top of this issue, an attorney can help you draft a temporary order that will prevent the stimulus payment from becoming yet another problem to deal with in your divorce. Or if your spouse succeeds in temporarily swiping the benefit and taking the check for themselves, then an attorney can help you balance the equities on final orders by convincing a judge or jury to award you a larger share of other available property, if possible.
The amounts of this stimulus check may not be worth fighting over in court. The best solution is to try to come to an agreement - either to fairly divide the check now, or to hold on to it pending the final division of the whole marital estate. But there is talk of future stimulus checks of larger amounts being distributed in the future based on how long the coronovirus pandemic keeps hurting the economy. A well crafted temporary order now may prevent future check disputes when the financial consequences of who gets the stimulus check are higher.
If you have any questions about this topic or any other issues regarding your Houston/Galveston area divorce, then please contact us. For a limited time we are offering free virtual consultations to anyone going through a divorce or custody issue. Visit us at www.thepalmerlawfirm.com to schedule.
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Attorney Sean Y. Palmer has over 18 years of legal experience as a Texas Attorney and over 24 years as a Qualified Mediator in civil, family and CPS cases. Palmer practices exclusively in the area Family Law and handles Divorce, Child Custody, Child Support, Adoptions, and other Family Law Litigation cases. He represents clients throughout the greater Houston Galveston area, including: Clear Lake, NASA, Webster, Friendswood, Seabrook, League City, Galveston, Texas City, Dickinson, La Porte, La Marque, Clear Lake Shores, Bacliff, Kemah, Pasadena, Baytown, Deer Park, Harris County, and Galveston County, Texas.