We have been fielding an number of questions about the stimulus checks that are to be issued by the federal government. A quick summary: subject to income thresholds and other criteria, individuals will receive $1,200, a married couple will received $2,400 and parents are to receive $500 per child.
If you are in the process of getting divorced or already divorced, take an approach that allows you to maximize what you may receive. Once divorced, the parents will often alternate claiming the child(ren) on their tax returns on an annual basis. Here’s where the trouble starts! Our understanding of the payment process is that the parent who most recently claimed the child will receive the payment. If the recipient parents has historically claimed the child(ren) this may be appropriate. However, in situations were the parents alternate claiming and are equally responsible for the children’s expenses, this can create an unfair result. As this is a new government benefit, there is no real guidance on how these funds should be allocated between the parents. Our approach is to recognize that while $500 per child is significant, fighting over how to allocate the money quickly becomes cost prohibitive. Why not agree to use the funds for agreed-to expenses for the child or fund a college account. Such an approach will keep you both focused on the child and realize the most bang for the buck.
