In this continuing series, we cover how the Recovery Act may affect child support. In our last post [link to previous post], we covered the impact of the Child Care Credit and Dependent Care Exclusion. In this post, we will address the Unemployment Exemption.

The Rescue Act extends unemployment benefits through September 6, 2021. Similar to the CARES Act where the additional $600 was added in addition to unemployment benefits, the Rescue Act provides an additional $300 per week. The Rescue Act also makes the first $10,200 in unemployment benefits received in 2020 non-taxable for households with incomes under $150,000. For married couples, each spouse can exclude up to $10,200 of their unemployment benefits provided their household income is less than $150,000. The Rescue Plan has clear cut-offs and looks at the household income. If a household made $149,999, and both parties received unemployment compensation, both are eligible to exclude the first $10,200 from their taxable income. If a household makes $150,001, both parties are disqualified from the exemption.

How Does the Unemployment Exemption Affect My Child Support Order?

While the IRS may be exempting the first $10,200 unemployment benefits received in 2020, that does not mean Domestic Relations should do the same when entering the support order. A support calculation should be run that considers the results when the first $10,200 is tax-affected compared with the results when it is tax exempt.

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