As part of the recently enacted CARES Act, many American households have already received or are anxiously anticipating the receipt of an Economic Impact Payment, also known as a stimulus payment. Specifically, the Act provides for the payment of $1,200 per adult for individuals with an annual income less than $99,000 (or $198,000 if married filing jointly) plus $500 per qualifying child under 17 years old – or up to a total of $3,400 for a family of four. As of April 15th, tax filers who previously received direct deposit of their income tax refunds started receiving their stimulus payments electronically and the processing of paper checks for other prior tax filers was set in motion.
The Bad
While the purpose of the stimulus payments is to provide well-deserved financial assistance to workers and their families during the COVID-19 crisis, not everyone who otherwise qualifies will actually receive their anticipated payment. Specifically, if you owe past due child support and you are eligible to have your income tax refund intercepted via the Treasury Offset Program, you should not be surprised if your payment never arrives. Rather, your stimulus payments will likely be intercepted and applied toward your past due child support arrears. There some nuances associated with the process that are too involved to discuss in the context of this article, but the bottom line is that you may not receive the stimulus payment you are anticipating if you owe past due child support arrears.
The Ugly
Interestingly, if you have a qualifying child under the age of 17 and you are expecting a $500 payment for him or her, you will likely not receive that payment either if you are subject to tax intercept and owe past due child support. For example, if you have past due child support arrears from one relationship and a child lives with you from another relationship, you should not be surprised if the portion of your stimulus payment for the child who lives with you is also intercepted and applied to your past due child support arrears for your other child. While this does not necessarily seem fair, the federal government has not provided any guidance on how child support intercepts involving stimulus payments attributable to children outside of the support action are to handled.
Another issue is what happens when a married couple is a due a stimulus payment because they filed their last tax return jointly, but one of the spouses owes past due child support arrears as a result of another relationship? In that case, the full amount of the stimulus payment (up to the amount of the past due child support arrears owed by the delinquent spouse) due to the married couple will be intercepted. The non-delinquent spouse, however, may file IRS Form 8379 to claim their portion of the stimulus payment intercepted on account of the delinquents spouse’s past due child support arrears.
The Good
Finally, the good news is that if that the mother or father of your child owes past due child support arrears, and is subject to tax intercept, then the chances are good that his or her stimulus payment will be intercepted. In fact, the Pennsylvania Bureau of Child Support Arrears expects that it will start receiving intercepts between April 17th and April 21st. As such, you may receive an unexpected surprise in the nature of a substantial payment toward any past due child support arrears owed by the mother or father of your child. Moreover, if the mother or father of your child is married to someone else and/or has other children, you might even receive an added bonus in the nature of the stimulus payment attributable to his or her spouse and/or other children.
As can be easily seen, perception has everything to do with whether or not the interception of stimulus payments for past due child support arrears is bad, ugly or good.
The divorce and family law attorneys of Shemtob Draganosky Taylor Stein, PC, PC are available to assist with all of your family law matters including, but not limited to, support; divorce; division of assets; custody; and protection from abuse. Please do not hesitate to contact our family lawyers in Montgomery County at (215) 544-3974 for a confidential discussion. While we are working remotely during the COVID-19 crisis, we are still available to address your family law-related needs.
