Going through a divorce is stressful enough, but the coronavirus pandemic spreading throughout the United States presents additional complications for spouses who have decided to split. In addition to changes that might need to be made regarding custody and visitation arrangements while travel is restricted, negotiations over property division need to address any new economic circumstances. For example, the value of investments or business shares should be reviewed and possibly downgraded. Moreover, the stimulus checks that many Americans will receive under the Coronavirus Aid, Relief, and Economic Security (CARES) Act are assets that will become part of a couple’s marital estate and be subject to distribution among the spouses when the marriage ends.
If you’re ending your marriage or are legally separated and are unsure about how you will receive your disbursement from the government, here’s what you should know:
- Filing status — Check disbursement is based on recipients’ most recently submitted tax return. If you’ve already filed your 2019 return, the status you used will determine if you and your spouse receive one payment (for those who file jointly) or two (married filing separately). Taxpayers who have not yet sent in their return (the deadline is now July 15) are classified based on their 2018 filing.
- Income eligibility and child rebates — Spouses who file separate tax returns can each receive up to $1,200, but for any person whose annual individual income is more than $75,000, that amount begins to drop and is completely eliminated if they make more than $99,000. Similarly, married couples are entitled to $2,400 until their combined income reaches $150,000. From there, the payment is reduced until it phases out at $198,000. There is also a $500 rebate for each child who is 17 years old or younger.
- How the funds are disbursed — When the IRS has a bank account on record for a direct deposit, the funds are transferred that way. Otherwise a check is sent. This could create a problem if only one partner has access to the account that was previously used for a joint filing. In situations where spouses no longer share finances due to a legal separation or in preparation for divorce, you should see that the stimulus payment is included when marital assets are divided.
An experienced divorce lawyer can advise you about the distribution of federal stimulus payments and any other assets during the course of a marriage.
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Butler & Flynn, PLLC represents clients in all types of divorce proceedings. For a consultation, please call 405-416-2711 or contact the firm online.