The ongoing coronavirus pandemic has inflicted unprecedented economic challenges for the American people since the virus emerged in the United States in early 2020. Forced lockdowns and business closures resulted in severe economic strain, and the United States government under former President Trump initiated a financial relief plan to assist struggling families across the US, and President Biden continued this relief. This plan included direct cash payments to Americans, providing relief based on income, and providing additional relief to parents with children under 18.
The rules for these stimulus checks evolved with each iteration, but since the first wave of stimulus checks was issued, parents under child custody agreements have encountered issues concerning which parent receives stimulus money. For example, if parents share custody of a child, should the stimulus credit for the child go to both parents, or one or the other? Does the custodial parent get the noncustodial parent’s stimulus check? Can both parents claim the dependent, and each gets the dependent stimulus credit? These are just a few of the questions that parents under child custody orders have had over the past year.
Ultimately, the rules in place regarding the stimulus checks state that whichever parent can claim the child on their tax returns as a dependent is entitled to receive the stimulus credit for that child. The Internal Revenue Service (IRS) upholds several “tiebreaker” rules to help divorced or unmarried parents who share custody determine which parent gets to claim the child as a dependent:
- If both parents file a joint tax return, they may claim the dependent credit on their jointly filed tax return.
- If both parents file separate tax returns and claim their child on both returns, only one parent may claim the dependent credit for the child. The parents would use the Residency Test to determine which parent receives the dependent credit. This means that the parent with whom the child lived the longest during the tax year has the right to claim the dependent credit for the child.
- If the child spent an equal amount of time living with each parent during the tax year, whichever parent-reported higher adjusted gross income may claim the dependent credit.
The IRS issued the stimulus checks and used the same eligibility criteria for the child tax credit for determining eligibility for the dependent stimulus credit.
Can a Custodial Parent Take a Noncustodial Parent’s Stimulus Check?
The first wave of stimulus checks was issued in March of 2020. The rules for this wave of stimulus checks included the possibility of interception for unpaid child support up to the total amount of the stimulus check. The first wave provided up to $1,200 for adults and $500 for each dependent. For example, if two divorced parents have one child and a custody arrangement in which one of them has sole custody, and the other pays child support, the custodial parent would have received $1,700 for the first stimulus payment. The noncustodial parent would have received $1,200. If the noncustodial parent owed $1,200 or more in unpaid child support, their stimulus check would have automatically gone to the custodial parent toward their child support debt.
The second round of stimulus checks was issued in December of 2020 and were not subject to automatic interception. However, if a noncustodial parent owed child support, the IRS would withdraw part or all of the noncustodial parent’s tax refund to repay their child support debt.
The third wave of stimulus checks issued in March of 2021 under the American Rescue Plan included $1,400 per person and per dependent claimed on 2020 tax returns, regardless of age. It is still unclear how these payments will influence tax returns and the claiming of dependent tax credits for tax year 2021.
So far, only the first round of stimulus checks qualified for interception for unpaid child support. The federal government has announced an advancing system for the 2021 child tax credit expected to begin issuing monthly payments starting in July. If you are unsure how your custody order will influence your ability to receive these credit payments, it is best to consult an attorney, so you know what to expect. The rules for the second and third stimulus checks did not include automatic interception for unpaid child support, and there has so far been nothing that states a custodial parent can take a noncustodial parent’s stimulus check.
Custody and Stimulus Credits Going Forward
Based on the previous stimulus check rules, it is likely that if any further stimulus payments are issued to the American people that the IRS will continue issuing dependent stimulus credits based on a parent’s eligibility to claim their child as a dependent for tax purposes. Generally, a custodial parent with majority custody rights should expect to receive stimulus credits for their dependents going forward.
When it comes to the noncustodial parent’s stimulus check, they may not have any requirement to send their child’s custodial parent any or all of their check. Still, it is worth considering a personal arrangement with the child’s custodial parent if it will serve their best interests. The pandemic has affected everyone in America, including children. Many children have been unable to go to school and spend time with friends, and others have dealt with troubles at home due to the severe economic strain the pandemic has caused for their parents. If you are a noncustodial parent, remitting some amount of your stimulus check toward helping your child is a reasonable and compassionate choice, but a personal one.
Speak With a Tax Professional
Thus far, the stimulus payments issued by the IRS have used the criteria for the dependent tax credit to determine eligibility to receive the stimulus-dependent credit. However, these rules are very complex, and your custody situation may seem to align with several of the standards set forth by the IRS. While it remains unclear whether there will be further stimulus payments to Americans, it is important to remember the value of professional tax advice if you have concerns about future stimulus payments and child tax credits for tax year 2021 and beyond.
Whether you are a custodial or noncustodial parent, professional tax advice can help you determine the best approach to any stimulus-related issues you and your co-parent encounter in the near future. Additionally, if you believe you qualified for the stimulus-dependent credit but did not receive it with the most recent round of stimulus checks, a tax professional is the best available resource for determining your options for addressing this situation.
How to Handle Financial Disputes With Your Co-parent
Child support is an inherently contentious issue. The economic strain caused by the pandemic and subsequent lockdowns is an unprecedented matter that will likely influence the economy and American family dynamics for years to come. Ultimately, no matter what financial measures the government takes regarding child stimulus credits and dependent tax benefits, you have a responsibility to do what is best for your child.
Many parents who share custody have roughly equivalent custody rights, and determining which parent has the right to claim their child as a dependent for tax purposes has been an issue for many parents for years. The new influx of issues caused by the coronavirus pandemic has exacerbated these problems, spurring many divorced and unmarried parents to make personal arrangements regarding stimulus payments and adjustments to their custody and support orders. If you have concerns about your current child support order in this new reality, it is best to consult an attorney about possible changes you can make if you find it challenging to communicate with your co-parent.
Can I Change My Support Order?
If you and your child’s other parent have a family court order that dictates your respective child support and child custody rights, this order is not necessarily set in stone. The family court system of the United States offers a simplified path for requesting a change to a family court order because unexpected life events can significantly influence such an order. For example, if you pay child support to your child’s other parent and unexpectedly lose your job due to no fault of your own, you will have grounds to petition the family court for temporary relief from your support obligation, or at least protection from contempt proceedings due to nonpayment. It is also possible to petition the court to adjust your custody terms if you believe that your child’s best interests would be better served if you become their primary custodian.
Filing a petition for a post-judgment modification to your child support or child custody order is a relatively straightforward process. First, the petitioning party must explain their requested change to the family court, and a hearing is scheduled. This will provide the parents the opportunity to appear before a judge and speak on the issue. The judge must determine whether the proposed change would positively shift in favor of the child’s best interests.
What Happens If a Noncustodial Parent Refuses to Pay Child Support?
If a noncustodial parent is required to pay child support under the terms of a family court order but refuses to do so, the custodial parent can file contempt proceedings against them. The family court can enact several measures to ensure noncustodial parents pay support as required by their family court orders, including wage garnishment, asset seizure, or even incarceration of the nonpaying parent until they remit the unpaid support they owe. Parents who fail to pay child support can also have their tax returns seized by the IRS.
If you are a custodial parent in this situation, it is vital to consult an attorney as soon as possible. The economic strain caused by the pandemic can be made even worse if your child’s noncustodial parent refuses to pay child support as required, and swift legal action is the best remedy to this situation.
Maintaining a Positive Relationship With Your Co-parent Going Forward
It is unclear whether the pandemic will abate in the near future and how the economy will recover, and there is still debate as to whether further stimulus payments to Americans are necessary. This is new and uncertain territory for everyone, and there are bound to be unique situations that fall outside of established guidelines for new stimulus programs. Ultimately, it is best to be diplomatic and communicative with your child’s other parent for the best chance of navigating these possible issues with the least amount of stress involved.
Communication is vital for parents beholden to a child support order, whether they are divorced or were never married. Unless a noncustodial parent is completely uninvested in their child’s life, they will want to have regular updates and participate in their child’s life as much as their custody and visitation order allows. Custodial parents need the financial security that comes with receiving child support on time and in full. One of the best ways to prevent custody and support-related issues from arising is by maintaining effective and respectful communication.
If you pay child support and current events have influenced your ability to meet your support obligation, be up front about this issue with your child’s other parent. If the two of you can have a reasonable discussion about the issue, it’s possible to reach mutually agreeable terms without the court’s intervention. However, it is vital to remember that if you cannot pay child support due to forces beyond your control, you must notify the court of this change immediately, regardless of any personal arrangements you may have made with your child’s custodial parent.
Find Legal Counsel You Can Trust
Ultimately, child custody and child support can be very complex issues for any family. The pandemic, subsequent economic crisis, and the new rules regarding stimulus checks have compounded these issues. If you believe you have encountered any legal situation regarding stimulus payments, unpaid child support, or any other matters related to your family court order, Attorney Paula D. Kleinman can assist you. Contact our firm today for more information about the legal services we provide, and we will let you know how we can help.