For parents who share custody of their kids, child support can add some complications to their stimulus check total and eligibility. To add to that, the rules for the third payment have changed from the first two payments, removing a loophole that allowed some families to "double-dip" (both parents receiving their own dependent payment for the same child), among other major changes.
However, there's some good news for families with children. The new stimulus bill includes a large expansion to the child tax credit that could reduce child poverty by 40%, according to a report from the Center on Budget and Policy Priorities. That's on top of the $1,400 checks for qualifying individuals and the new bill's broader definition of dependent, which leads many families receiving more money this time.
Here are the details we've got so far, including when your check could arrive, how to track it and what to do if your third stimulus check is missing. (Plus, could there be a fourth stimulus check?) Read on as we sort out and explain the complicated details around child support situations and stimulus checks.
Is the loophole for joint custody and stimulus checks closed for the third payment?
Many parents who aren't married and share joint custody of their children actually received two payments for the same child during the first round of stimulus checks, if they alternated years claiming those children on their taxes. In other words, if one parent claimed a child in an even year and the other in an odd year, both could receive checks for that child. That's because the IRS looked at two different tax years -- 2018 and 2019 -- to determine eligibility for the first check.
For the second stimulus check, the IRS only looked to 2019 tax returns, but that doesn't mean the double-dipping loophole was closed entirely. If you're a parent in a joint-custody scenario like the one above and you typically claim a dependent child in odd-numbered tax years, you may be able to get a duplicate $600 child dependent payment as a tax credit when you file and claim the child on your tax return, similar to what you'd do if you did not receive a second stimulus check despite being eligible for one.
That loophole could be closed off in the new stimulus bill that authorizes the third check. According to Andy Phillips, director at The Tax Institute at H&R Block, parents who aren't married to each other and who alternate custody of an eligible dependent might not both qualify to receive stimulus money for the same dependent this time around.
Phillips said because of guidelines Congress included in the new law, "it's possible that if an advance payment is received by one parent for the dependent, no additional payment can be made for the same dependent on the other parent's return (by claiming the Recovery Rebate Credit)." Phillips said the Treasury Department is expected to issue guidance on this situation, but at this time, it hasn't yet.
How is child support connected to the third stimulus payment?
With the third check, if you're past due on child support, you can still receive your full stimulus payment. It won't be redirected to cover late support payments. This holds true for any past-due federal or state debts: Your third payment is not subject to reduction or offset. However, private debt collectors may be able to redirect your payment to cover a debt.
Also, the IRS can withhold all or part of a stimulus payment if you're claiming it as Recovery Rebate Credit when you file your taxes. An independent taxpayer advocacy group within the IRS is working with the agency to address this issue.
New dependent guidelines open up eligibility for the third stimulus payment
The third stimulus check makes dependents of all ages count toward the family total, for $1,400 apiece. This time around, a qualifying dependent is anyone you claim on your taxes, including a qualifying child younger than 19 years old, a student younger than 24 years old or a qualifying relative who relies on you for care.
What to know about the 2021 child tax credit
The child tax credit will distribute payments of up to $3,600 per child to tax holders who qualify for the income threshold. According to CNBC, parents of dependent children may be able to use the same even/odd tax filing method to both receive payments. The US Treasury and IRS have not yet offered guidance on how they will administer advanced payments to parents in split custody arrangements, CNBC said.
How other eligibility changes affect your stimulus check
The new stimulus payment is "targeted," which means that fewer people qualify overall. The checks come with a sharp income cutoff, so that if you make above a certain amount -- say, $120,000 as a head of household -- you wouldn't be eligible for any stimulus check money, even if you have multiple dependents. The date you file your taxes, and when the IRS processes that payment, could also play a significant role in whether or not you'd receive a full or partial payment, or maybe none.
For more stimulus check details, here's everything to know about third stimulus check for up to $1,400 per person and how to track your stimulus check money.