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Divorce and the CARES Act

Apr 20 | 2020  by

By Abagail Richards, Esq. of Fausone Bohn, LLP on Monday, April 20, 2020.

Abigail Richards, Esq.

On March 27, 2020, President Trump signed the “Coronavirus Aid, Relief, and Economic Security Act” or the CARES Act. Under the Act, Americans with an income lower than $75,000 and couples filing joint tax returns with an income below $150,000 qualify for a “stimulus credit.” The stimulus credit for qualified individuals up to $1,200, and for qualified couples is up to $2,400, with an additional $500 for each minor child a person has. These stimulus credits are determined by either the 2018 or 2019 taxes the parties filed, whichever is most recent.

While for many these stimulus credits come as a welcome relief, to parties who have recently divorced or are going through divorce and separated parents of minor children are facing the question of where these credits will go. For parties that have recently divorced, to determine where the credit will go you must first determine how the parties filed their taxes. If the parties most recently filed taxes were filed separately, each party should receive a separate credit into the account associated with the tax return. If the parties most recently filed taxes were filed married filing joint, the stimulus credit will be deposited into the account associated with the joint tax return. If the account associated with the joint tax return has been closed or no account was designated, the stimulus credit will be delivered via check to the address of the primary individual on the return. The check will be written to both parties, and as such would need both parties’ signatures to be cashed. If the account that was associated with the tax return is still open, the stimulus credit will be deposited into that account. If the party who received the stimulus credit is unwilling to divide the credit, a motion may need to be filed in the divorce case to enforce the division of the credit.

For many separated parents, they are wondering which parent will receive the $500 credit for each child. Like the stimulus credit, the answer depends on the most recent tax returns filed by the parents. The child credit will be awarded to the parent who claimed the minor child on the most recent tax return. The stimulus credit is treated similar to a traditional tax return, so if the parent has a large child support arrearage, the Friend of the Court is able to intercept the credit to pay towards the child support arrearage.

If you find yourself facing any of these issues, the family law practice at Fausone Bohn, LLP is here to help. The firm has decades of experience helping clients with an array of family law issues, including divorce, child support, and enforcement. Please feel free to call or email us anytime as we are here to assist. Abigail Richards can be reached at  248-123-3238 or by email at arichards@fb-firm.com.