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COVID Stimulus Payments Received During a Divorce

New COVID stimulus checks are starting to hit bank accounts today. For couples who are legally separated or who initiated a divorce action since filing their 2019 income tax returns, how and who receives these payments can be a contested issue.  

The stimulus payments will be considered marital property because they are based on a couple’s most recent joint tax return. A pending divorce case does not change the status of the payment as marital property. And during a divorce, both spouses have the right to those funds.

Where will our stimulus check go?

The IRS has stated that it is using the contact information provided in taxpayers’ most recent returns to send the payments. This could be a direct deposit to a bank account or a paper check mailed to a last-known address. The IRS provides an online tool  to track stimulus payments. If a person has not received their payment yet, they might be able to designate a bank account or address.

How do we decide how to split the stimulus check?

The fact that the stimulus payment is marital property does not necessarily mean that it must be divided 50/50 between the spouses. It does, however, mean that one spouse should not withhold the payment, or information about the payment, from the other spouse.

If a party to a divorce case believes their spouse has misappropriated the stimulus payment somehow, they should consult with a divorce attorney. It could be an issue that will affect the overall division of property in the case.

As a marital asset, how it is divided must be either agreed upon or resolved by the divorce court.  Reaching an agreement now means that both you and your spouse can use the money now.  If one spouse decides to take the money,  document as much as you can. Document when you receive the stimulus payment and the amount received. If your spouse received it because it went to their address or a bank account they control, you may be able to document that using the IRS’s online tool. This information can be very helpful for your lawyer and the court.

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Beckman Lawson, LLP
201 West Wayne Street
Fort Wayne, IN 46802

Phone: 260-422-0800
Fax: 260-420-1013