Will Joint-Custody Affect My Third Stimulus Payment?

How much am I getting? When will it come? Why don’t I qualify for more? We all have plenty of questions about the third stimulus payment. However, for unmarried parents with joint-custody of their children, the list of questions is much longer.

For unmarried parents with joint-custody of their children, taxes can be a headache. Some parents take turns claiming their shared child or children as a dependent(s) for tax purposes every other year as part of their agreement. This accidentally created a “loophole” under the first two stimulus packages, in which both parents could receive a dependent payment for the same child if they filed in alternate years. This is due to the fact that the IRS checked both 2018 and 2019 tax returns to determine eligibility for dependent payments under the first stimulus package.

For the second stimulus payment, the IRS only assessed 2019 tax returns. However, parents who claimed their children as dependents in odd years still qualified for a duplicate $600 tax credit, even if the other parent had already received the $600 dependent payment for the same child.

Is the Double-Dipping Loophole Closed?

Some dubbed this loophole to be double-dipping, and experts say that it has likely been adjusted in the most recent stimulus package. According to tax experts, this time around, if an advance payment is made for a dependent child, it’s possible that no additional payment will be made for that child, even if the other parent claims the Recovery Tax Rebate Credit on their tax return. However, while it seems that this loophole may be closed under the current stimulus package, no expert can say for sure that this is the case, and only time will tell.

Can Child Support Affect My Stimulus Payment?

The third stimulus payment cannot be seized and used to pay child support. The third stimulus payment is not subject to reduction or offset due to state or federal debts. However, it is possible that private debt collectors can seize your stimulus for payment. The IRS may also be able to hold part of your payment if you claim it as a recovery rebate credit when you file your taxes.

Expansion in Other Ways

While the third stimulus payment may have closed this loophole, it has expanded eligibility and benefits in other ways. For instance, as noted above, your payment is protected from seizure to satisfy state and federal debts. Additionally, eligibility for qualified dependents has expanded to cover anyone that you can claim on your taxes. This includes children under 19 years old, students under 24 years old, and qualifying relatives that rely on you for care. Any individual in your family meeting these criteria qualifies for a $1400 payment. Additionally, under the most recent stimulus package, the Child Tax Credit has been increased to provide tax credits of $3600 per child for individuals below the income threshold. Parents using the alternate year dependent tax filing system, may both be able to claim this credit for shared children.

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Resource:

cnet.com/personal-finance/child-support-and-the-third-stimulus-check-let-us-clear-up-the-confusion/