Child Support and the CARES Act Stimulus Checks
As millions of Americans begin receiving stimulus checks from the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act, many are wondering what impact these payments might have on child support payments. Whether you receive or pay child support, we’ve answered some basic questions below:
Who qualifies for a federal stimulus check?
Individuals can qualify for payments of up to $1,200, and couples can qualify for payments of up to $2,400. Those who qualify and have dependent children under the age of 17 are eligible for up to $500 per child. Here’s who qualifies for the full credit:
- Individuals whose Adjusted Gross Income (AGI) is $75,000 or less;
- Individuals who are the head of household and whose AGI is $112,500 or less; and
- Couples whose AGI is $150,000 or less
Those whose incomes exceed the thresholds mentioned above will still receive payments, though the payments are reduced $5 for every $100 your income exceeds the threshold. Individuals with AGIs exceeding $99,000 and couples (without children) whose AGI exceeds $198,000 will not qualify. The qualification threshold generally increases by $10,000 per child.
Remember: if you’re separated but not yet divorced, then your marital status on December 31st of the a given tax year determines your eligibility to file jointly. If you’re still married, you can elect to file either jointly or as married, filing separately.
Are these payments considered income?
No. These payments function as a tax credit rather than a deduction, meaning that it reduces your 2020 tax liability on a dollar-for-dollar basis. Virginia calculates child support based upon gross income (Code of Virginia §20-108.2(C)), so these payments won’t affect your gross income for purposes of child support.
What impact will the tax credits have on support?
In most circumstances, none. Virginia utilizes presumptive child support guidelines, meaning that unless the Court determines that “the application of such guidelines would be unjust or inappropriate,” the presumptive amount as set forth in the Code of Virginia §20-108.2(B) will be awarded. If either party asks the Court to deviate from the guidelines, the Court must consider the tax consequences to the parties including claims for exemptions, child tax credit, and child care credit for dependent children,” pursuant to Code of Virginia §20-108.1(B)(13).
What if back child support is owed?
Unpaid child support may be offset against these payments, but typically only if the Division of Child Support Enforcement is involved and has reported the arrearage to the U.S. Department of the Treasury.
If you have questions pertaining to your child support matter or any other Virginia family law issue, we’re still available during the COVID-19 stay-at-home order. You can request a call or a virtual meeting with a Curran Moher Weis attorney through our online form.
The information contained within this blog is provided for informational purposes only and should not be used as a substitute for obtaining accounting, tax, or other guidance from a licensed tax professional.