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How Divorce Affects Your COVID-19 Tax Refund

Many individuals will receive a stimulus payment (“tax refund”) soon. The refunds are based on their most recent income tax filing. Single filers will receive $1,200 and $500 per child. Joint filers will receive $2,400 and $500 per child. Pursuant to the CARES Act a/k/a the Coronavirus Aid, Relief and Economy Security Act: “with respect to a joint return, half of such refund or credit shall be treated as having been made or allowed to each individual filing such return.”

What does this mean for divorcing and separated couples who last filed joint returns?

For couples without children, the answer is easy. Each spouse receives $1,200. For couples with children who are still living together, the answer is still relatively easy. Each spouse receives $1,200 and half of the child refund. 

But for couples with children who are no longer living together, the answer is not so easy. For those couples, their specific circumstances are important. If both parents are still financially supporting the children, it seems fair to equally split the child refund. But what about when one parent is not financially supporting the children?  When one parent isn’t providing financial support, questions must be asked. Is it because he or she is unemployed? Or is the cause less innocent?

Once couples with children are divorced, their right to claim children on tax returns is established legally. But during the divorce, couples must either agree how to file or the court will decide for them by entering an order on how they are to file.  This should be the same way divorcing and separated parents handle the issue of dividing the COVID-19 stimulus refund. They need to agree between themselves or spend money to have the court decide for them.

So the real question is, do divorcing and separated couples want to use the child refund for their child or would they rather argue about it and spend it on their attorneys?

Contact Diamond & LeSueur if you have any questions.

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