On March 26th, 2020, news broke that a record 3.3 million Americans filed for unemployment benefits in a single week as a result of the escalating COVID-19 pandemic.
Now, a little over a month later, the number of Americans filing for unemployment has risen to over 30 million. While the official unemployment rate in the US stands at 4.4%, economists think the actual unemployment rate is closer to 13%
In an attempt to offset some of the economic downturn caused by COVID-19, federal lawmakers drafted a $2 trillion economic stimulus package. As part of that stimulus package and the newly released CARES Act, the US government awarded many adults with stimulus checks of $1,200 or more, depending on their circumstances.
Under the CARES Act, parents will receive $500 per child in addition to the $1,200 stimulus. How additional stimulus money applies to divorced parents can be challenging to understand. If you're a divorced parent wondering how the stimulus checks will affect you, read on.
How COVID-19 Stimulus Checks Work for Divorced Parents
If you're a divorced parent and filed taxes as the head of household (meaning you claimed your children as dependents on your tax returns), you'll receive a stimulus check for $500 per child, up to $1,000 for two children.
Many divorced parents are engaged in roughly 50/50 custody arrangements, and wonder whether each parent will get $250 per child or be required to split stimulus checks for children. The short answer to this question is, counterintuitively, "no."
In a completely equal joint custody agreement, whichever parent the child spends more time with is the custodial parent—even if the child is only with that parent for one more night per year. Only the custodial parent can file as head of household and receive stimulus money.
If you have a pending divorce and filed jointly with your soon-to-be-ex-spouse on last year's taxes, you will receive your stimulus money as if you were a married couple (in this case, you and your ex will jointly receive $2,400 plus $500 per child, deposited into the account used for your most recent tax returns). Under these circumstances, you should seek aid from an experienced family lawyer who can help ensure the stimulus money is split equitably between both parties.
In situations where parents are engaged in joint custody arrangements, state supreme courts urge parents to work together to divide the stimulus check equitably. For example, let's say you share one child with your spouse. You have custody 40% of the time, and your spouse has custody 60% of the time. Your spouse will receive the full $500 stimulus, because they're the custodial parent. However, in an ideal world, you would receive 40% of that stimulus ($200).
We encourage divorced parents to work together during this time. Collaborating to split stimulus checks (where necessary) can help ensure that your children maintain a good quality of life, regardless of which parent they're staying with. A family law attorney can help you and your ex negotiate on how to split stimulus money for your children equitably.
How Do I Know if I'm Eligible for the Stimulus?
Not all Americans are eligible for the $1,200 stimulus under the CARES Act. You can't receive stimulus money if you:
- File individually and make over $99,000 annually, or make more than $136,500 as the head of household. High-income individuals are ineligible for the stimulus check. Individuals who make more than $75,000 and file individually, or $112,500 as the head of household, will receive reduced stimulus payments.
- Didn't file a tax return. If you failed to file your 2018 or 2019 tax return, you won't receive a stimulus check.
- Don't have a valid Social Security number. If your security number isn't work-eligible, you can't receive the stimulus—even if you filed taxes using an Individual Taxpayer Identification Number (ITIN).
- Are a nonresident alien. Unfortunately, nonresident aliens who lack a green card and don't spend enough time in the US to qualify as a residential alien won't' receive stimulus money.
- Aren't living in the US. US citizens living abroad can't receive stimulus money.
Parents ineligible for the CARES Act who are struggling financially during the COVID-19 pandemic should consider filing for unemployment benefits with their state, if possible. Under the CARES Act, unemployment benefits have been extended to 13 weeks, and individuals who receive unemployment receive $600 more per week than normal.
The bolstered unemployment benefits provided by the CARES Act may be enough to give you the financial help you need if you don't qualify for a stimulus check or are currently out of work.
Unfortunately, many state unemployment systems are currently overwhelmed by the number of applicants. If you're filing for unemployment, here are some tips:
- Apply online if you can. Wait times at unemployment offices and over the phone are obscenely long, so applying online could save you valuable time.
- Apply early in the morning or late in the evening. If you apply while others are asleep or busy, you have a better chance of getting through.
- Keep in mind that unemployment benefits are susceptible to both federal and state taxes. If you receive unemployment benefits, make sure to set aside enough to pay for taxes at the end of the year. You can also choose to have taxes automatically withdrawn from your unemployment benefits if you prefer.
With a little collaboration and know-how, divorced parents can use the CARES Act and stimulus or unemployment benefits to their advantage to provide care for their children.
If you have questions about how to split your stimulus check with an ex or other family law-related concerns, the Law Office of Nancy Perry Eaton, PLLC, is here to help.
Contact the firm online or call at (254) 221-8588 for a free consultation with a member of the team!