The pandemic has strained the finances of many families. There have been news stories across the country about domestic disputes being on the rise due to pandemic-related unemployment, quarantine orders, and social distancing requirements. Now, there have been increases in custody issues and domestic violence due to disagreements about stimulus payments and the upcoming child tax credit beginning this summer. There have been parents shooting one another to force agreements to share or remit the entirety of a child-related government payment during the pandemic. Given the economic state of many families, there are bound to be questions about the legality of how divorced co-parents share or receive federal stimulus benefits and child tax credits.
Government Funded Pandemic Payments, Divorce, & Co-Parenting
For divorced couples sharing their children, the issue of stimulus checks and child tax credits can be complicated. Couples going through a divorce have the benefit of a judge and legal system to equitably decide these issues. For divorced couples with settlement agreements, a decision has already been made about how the federal government will deposit entitlements. Parents sharing custody of minor children typically have legal instructions regarding how to list the children on their tax returns. While the divorced parent who can’t claim their children to receive the child tax credit this year may feel it’s an unfair occurrence, it may be possible to meet with your attorney to work out an arrangement with your co-parent.
How the 2021 Child Tax Credit May Cause Problems for Co-Parents
The stimulus check was already complicating matters for many co-parenting families, and now with the addition of the advanced Child Tax Credit for 2021, qualifying parents will see monthly relief checks from the federal government of $250 per child between the ages of 6 and 17 and $300 per month for qualified families with a child 6 years old or younger. This increased benefit may mean even more turmoil for families already fighting for the right to claim minor children as dependents for tax purposes. It could also lead to a protracted legal fight for those currently going through a divorce working on settlement agreements. According to current IRS regulations, if there is nothing in the settlement agreement that specifies otherwise, and the custodial parent has nothing in writing about the issues, the IRS will use tiebreaker rules.
- A divorced parent sharing custody may claim a child as their dependent if they spend more time with said child.
- If the divorced parents spend an equal amount of time with the child, then the parent with the highest AGI may claim the child as their dependent.
- If only one of the taxpayers is a parent to the child in question, then that parent may claim the dependent.
The IRS could be forced to act as the determining body for who would earn the credits. They may be forced to audit filers who claim the same child and determine who has the minor most, and award that person the right to claim the dependent.
Advocating for Families Like Yours Since 2006
At Cecil & Cianci, PC, our attorneys help families make smart choices with their legal issues. The financial and tax ramifications of the changes to the Child Tax Credit may impact your filling, and you may need to ensure you have legal representation. Bring in your divorce settlement agreement and the details of your parenting plan, and you can discuss the specifics of your case with one of our family law attorneys. If you are unable to come to our offices, we offer contact-less consultations during these challenging times. Call us at (916) 675-3866 to schedule a consultation or for more information on how we could assist in your situation.