Stimulus checks will offer much-needed relief for some Americans struggling during COVID-19, but divorced parents on the giving and receiving ends of child support may have additional questions as to how such payments will affect their finances. We have broken this question down into how stimulus payments may affect four different areas, which we will address in separate blog posts:
- Stimulus Checks
- The Child Tax Credit
- The Child Care Credit and Dependent Care Exclusion
- Unemployment Exemption and Child Support
In this post, we will cover stimulus payments and child support. Here is what you need to know:
On March 11, 2021, the third COVID-19 stimulus package, the American Rescue Plan Act (the “Rescue Act”) was signed into law. Included in the Rescue Act are extensions to existing unemployment benefits, expanded and refundable tax credits, and another round of stimulus payments. Similar to the two previous COVID-19 relief packages, the stimulus payments have garnered the most attention. However, the spotlight should also be aimed at the expanded tax credits and exemptions.
The Rescue Act sends $1,400 stimulus checks to:
- Single filers earning up to $75,000 per year;
- Head of households earning up to $112,500 per year; and,
- Married couples, filing jointly, earning up to $150,000 per year (each spouse receives $1,400).
No checks are sent to single filers at or exceeding $80,000, heads of household at or exceeding $120,000, and married couples at or exceeding $160,000.
Additionally, families receive $1,400 for each dependent claimed on a tax return, not only qualifying children under the age of 17. The list of eligible adult dependents includes college students, SSI recipients, and SSDI recipients.
How Do Stimulus Payments Affect My Child Support Order?
The stimulus payment should be considered income for support purposes, as it falls under the general assembly’s definition of "income." It is a form of payment due to and collectible by an individual, regardless of source.
In the case of parties that filed jointly in 2019, but are no longer a couple, and who do not share the bank account where the funds were deposited, each adult is entitled to his or her $1,400. However, individuals may only take their $1,400. They may not use this money to collect any unpaid child support debt.
In our next post, we will cover the effects of the Recovery Act on the Child Tax Credit.
Financial issues surrounding divorce and custody can be confusing. If you have questions about your particular situation, please contact Williams Family Law at 215-340-2207, or email firstname.lastname@example.org.