Stimulus/Tax Refunds and Divorce

Stimulus/Tax Refunds and Divorce

The government has ordered stimulus checks for most adults and children, which are either on their way or have already arrived. This may be a challenge for those who are now divorced but were married in 2019 and filed a joint tax return. The checks will likely be directly deposited in the account listed on the IRS return for 2019.

Another issue that comes up is what to do with stimulus checks paid on behalf of each child? The payment will go to the parent who claimed the children on their tax return. But the question remains. How should the stimulus money be divided?

Three Options for Dealing with Stimulus Checks to Individuals Who are Divorced

If you were married and filed jointly in 2019 and have subsequently divorced, you have three options for getting your part of the funds if they were deposited in the other spouse’s bank account.

  1. If you and your ex-spouse are on good terms and trust each other, you can make the arrangements for division of the funds. Keep a written record of your agreement and receipt of the funds.
  2. Contact your lawyer who can attempt to facilitate an agreement between the two of you for dividing the funds.
  3. Your attorney may be able to file a motion to obtain a court order for the division of the stimulus funds since they may be considered marital assets, unless your judgment indicates otherwise, and should be distributed equitably as are all marital assets. However, seeking a court order for distribution of stimulus funds may cost more than the actual funds. The best course is typically by agreement.

Stimulus Money for the Children

Whoever claims the children on their tax return, according to the terms of the final divorce order, is the one who should receive the stimulus check earmarked for the children. If you have a good relationship with your children’s other parent, hopefully you can work it out so that the funds are properly distributed.

Dealing with Stimulus Funds When Divorce is Not Yet Final

The law considers you married until the divorce is finalized. No matter whose name is on the account where the funds are deposited, the stimulus money belongs to both parties the same as any other marital asset.

How to distribute the funds should be part of your marital asset distribution discussion and agreement. If you are working on a Collaborative Divorce, your Collaborative lawyer or financial professional will discuss with you the best way to divide these funds, and you will include the division in your final marital settlement agreement.

For assistance on questions regarding the stimulus funds, contact us at Bruckner Hernandez Legal Solutions to schedule a consultation.