Stimulus Checks, Child Support, & Divorce: What to Know About a Possible Third Stimulus Payment

There has been a lot of speculation about the final version of the third stimulus package currently making its way through Congress. However, some details have been confirmed.

The stimulus payments will be much larger than in the first two rounds and potentially fewer families will qualify for the full stimulus amount. There is also a push to get dependents of all ages included for the purposes of determining how much each family receives. This would include more than just children under the age of 18.

The higher payment amount, the potential inclusion of more dependents, and the change in the White House have left many divorced and divorcing couples with questions about how this new round of payments will impact child support, alimony payments and division of assets.

Stimulus Check Details for Divorced Couples

The impact of the third round of COVID stimulus payments on your divorce will depend on a number of relevant factors including applicable court orders and where in the divorce or separation process you and your spouse are.

It is important to note that if you are behind on your child support payments, your stimulus payment, like any other tax refund, could be garnished to pay child support arrears or other back support owed. There are more details in the following sections.

If your divorce has not been finalized yet, any stimulus check money you or your spouse receive could be considered marital property and will be divided accordingly. Like in previous packages, your stimulus money will be based on your tax returns, most likely from 2018 and 2019 since many people have yet to file their 2020 taxes.

If that tax return is a joint tax return, the stimulus payment will likely be considered community property. If your return was not a joint return, you and your spouse should seek advice on how to handle the stimulus check funds, but it may be classified as separate property. You’ll also likely each receive separate payments, if you filed separately.

If you are divorced or separated and accidentally received your spouse or former spouse’s stimulus funds, it’s important to get legal advice on how to handle these funds. There could be legal consequences associated with withholding another person’s portion of the stimulus payment.

Third Stimulus Check and Child Support

The previous two stimulus packages treated those owing back child support differently. With the first stimulus, payments to individuals that owed child support could be reduced to offset any back child support owed. The second stimulus act did not garnish payments if the individual owed past-due child support.

There is no way to predict the details of the next stimulus package, but child support has been addressed in the latest proposal being debated in Congress. According to this proposal, people who owe child support would be able to get their full stimulus payment, but possibly only on advance payments such as a paper check, direct deposit, or EIP card that is sent automatically by the IRS. The final package will go into greater detail about how past-due child support will impact any stimulus check money received. 

Expected Qualification Changes

The biggest change that’s expected in this round of stimulus is changing the age cutoff for children who qualify as dependents for the purposes of payments. Families with children should note that the latest package could include children who are 17 or (depending on local rules) 18 but living at home and still in high school. This will impact parents who pay or receive child support, since the age ranges are similar.

There is also a sharp income cutoff that has been proposed. The current language suggests that if you are a head of household or have two heads of household, you will not qualify for stimulus money no matter how many children you have if your income exceeds a specific amount. That income cutoff level is yet to be determined.

Timing of the Third Stimulus

The timing of the next stimulus package is entirely dependent on how well the government works together over the next few weeks. The House of Representatives could pass a bill by the end of February which sends the bill to the Senate for approval. Depending on the process used to pass the bill in the Senate, it may be open to amendments or other modifications.

If it’s passed without modifications, it will go to President Biden to be signed into law and checks could begin to be distributed by the mid-March. If the bill is amended in the Senate, it needs to back to the House for approval. Both houses of Congress will need to pass the bill before it goes to the president for approval.

Conclusion

I hope that this article helps clear up some of the confusion surrounding this next stimulus package. If you have any questions about how a potential stimulus payment could impact your divorce or how mediation may make the process of incorporating this new income into your divorce, give us a call at 206.409.4086 or send us a message.