Written by Joanna R. Adu, Esq.
As a result of the recently enacted Coronoavirus Aid, Relief, and Economic Security Act (also known as the CARES ACT), eligible Americans have received, or are set to receive, a one-time payment from the federal government, referred to as a “stimulus” payment. The exact amount of any particular stimulus payment is based on the claimant’s prior year’s tax return; however, at most, each person can receive up to $1,200 per person ($2,400 per couple) and $500 per dependent child under the age of 17. For those in the process of getting a divorce, or who have recently finalized their divorce, many are wondering whether their ex-spouse, or soon-to-be ex-spouse is entitled to any portion of these stimulus funds.
As with many aspects of the current Coronavirus health pandemic, the rights and entitlements to the stimulus funds of a separated couple is a newly created issue of which New Jersey courts have not yet had the opportunity to directly address and establish precedent that would create guidelines for this situation. However, a review and consideration of each spouse’s entitlement to these stimulus funds is arguably analogous to each spouse’s entitlement to any other type of tax refund from the IRS. When a married couple has filed a joint tax return that results in a tax refund, a divorce agreement commonly provides that the parties will equally share in that refund, regardless of any differences between the respective parties’ earnings for that particular year. In equally sharing a tax refund based on a joint tax return, the parties also equally share in any tax credits or other financial benefits related to all claimed child dependents. As such, if the amount of stimulus funds received is based on a joint tax return filed in the previous year, each spouse is arguably entitled to an equal portion thereof. Under this set of circumstances, it is likely the easiest and most cost-efficient resolution for the parties to simply agree to an equal split of the stimulus funds, thereby saving the time and expense of arguing with your former spouse directly or through your respective attorneys.
However, each case differs and there are circumstances that may warrant one spouse being entitled to a larger portion, if not all, of the stimulus funds. For example, if separate returns are filed and one person is entitled to claim the child for that tax year, that person will likely argue that the full refund or stimulus funds attributed to the child should be his or hers alone. Under this type of scenario, or any case where the parties are unable to agree to a certain split of the stimulus funds, the division of same will likely need to be addressed as part of the overall negotiation of your divorce settlement. If you have questions and/or concerns about your entitlement to the stimulus funds it is imperative that you speak with a knowledgeable attorney who can guide you through an analysis based on your facts. Fortunately, the skilled and knowledgeable New Jersey family law attorneys at Lyons & Associates, P.C. have extensive experience in addressing this issue. We invite you to contact us online or give us a call at our office at 908-575-9777 to schedule a confidential appointment with one of our attorneys.