Month: April 2020

High Swartz | April 30, 2020

Which Parent Gets the $500 Child Stimulus Payment and How Does It Impact Support?

The CARES Act is distributing $500 stimulus payments for each qualifying child during the coronavirus pandemic. For those that are divorced, which parent gets it? Family Law Attorney Elizabeth Early explains.

Disclaimer: The regulations and guidance relating to the CARES Act payments continue to develop and are far from complete. The guidance in this blog is provided in connection with the feedback we are receiving today from our accountants. This information is subject to modification as more information and guidance is released by the Internal Revenue Service.

Millions of Americans who earn under certain income thresholds have received or will receive payments under the Coronavirus Aid, Relief and Economic Security (CARES) Act. Qualifying payment recipients will also receive additional funds ($500) for each qualifying child. The Internal Revenue Service has a ton of information addressing the income threshold and the definition of a qualifying child on their website. Below, I will explain which parent will get the payment and how it impacts child support.

Which parent receives the stimulus payment related to the child/children in a separated or divorced family?

Assuming that the parties file tax returns on a timely basis, the payment relating to the child will be issued to the parent who claimed the child or children on his/her 2019 federal tax return. The other parent (the parent who did not claim the child/children on his/her 2019 tax return) will not receive a payment this year for the child/children even if the other parent is the primary custodial parent.

Which parents receives the payment if 2019 tax returns weren’t filed?

In the event that the parties did not file 2019 tax returns, who receives the payment relating to the child will likely be based on the 2018 filing. Many parents are now faced with seeking a fair resolution to the division of the payment.

Can 2020 tax returns be used to decide who receives the payment?

It is possible that the non-recipient parent will receive compensation via a preferential tax treatment in connection with their 2020 federal tax return or via another payment, if the parties agree to change who claims the child/children on the 2020 federal tax return. The law is still developing in this area and we recommend consulting with an accountant to evaluate your options.

How do the CARES Act payments impact child support?

The CARES Act payments are non-taxable income that can be attributed to the receiving party for support purposes. Know that, even if the “wrong” parent receives the payment, that you may recoup a small portion in support. Parties may also agree to divide the payment outside of the support calculation.

Are the CARES Act payments subject to interception for overdue child support?

At this time, the guidance handed down to attorneys and the Domestic Relations Section of the Court is that the payment IS subject to interception for overdue child support. Complications may arise in this area where intercepted CARES Act payments were issued by the government in connection with children who are not covered under the support order at issue.

We recommend consulting with a Family Law attorney to discuss your options to resolve any dispute over the CARES Act payments and to evaluate whether what impact the CARES Act payments have on your payment or receipt of support. The family law attorneys here at High Swartz would be happy to answer your questions. Call 610.275.0700 or email eearly@highswartz.com.

Thomas D. Rees | April 13, 2020

How does the Relief For Workers Act Affect Unemployment Compensation Claims?

The new act removes restrictions on eligibility for unemployment compensation,  raises the dollar benefit amount; and increases the maximum weeks for collection.

On Friday, March 27, the President signed the “Relief for Workers Affected by Coronavirus Act” (RWACA), a massive expansion of unemployment compensation (“UC”) to workers who have lost employment because of the coronavirus pandemic.  RWACA is part of the temporary emergency package of laws known as the “Coronavirus Aid, Relief, and Economic Security Act” (the CARES Act).  As RWACA passed, the public received the news of 3.28 million new unemployment filings within the preceding week.

RWACA removes restrictions on UC eligibility; raises the dollar benefit amount; and raises the number of weeks for UC collection from 26 weeks to 39 weeks. The law also envisions the need to raise the maximum benefit period beyond 39 weeks. 

RWACA is the largest expansion of UC since government-mandated unemployment compensation began in the 1930s.  Since the UC program is a combined Federal-state program, RWACA will also add to state unemployment offices’ already significant workload. 

How long does RWACA last?

RWACA is temporary.  The eligibility and payment length portions of the law sunset on December 31, 2020 and the benefit increase ends on July 31, 2020. 

Who’s eligible?

RWACA extends UC to classes of workers who were previously ineligible for UC.  The law allows self employed workers and so-called gig workers to collect UC.  Now the solo marketing consultant is just as eligible for UC as a marketing director employed by a business.  A freelance writer is equally eligible for UC as a reporter employed by a media outlet. 

RWACA also makes it clear that furloughed workers, who may be recalled after a short hiatus, may collect UC. In Pennsylvania, this was not a major change since the law has allowed furloughed workers to claim UC. 

How much are UC benefits under the new law?

Under RWACA, unemployed individuals may receive an additional $600 per week over and above state allowed benefits.  The law requires the states to pay the added benefits, followed by a federal reimbursement to the states.  Since UC benefits vary greatly between states, this increase will be most dramatic in low-benefit states such as Mississippi, where $600 per week increase will more than triple the current maximum benefit.  Even in Massachusetts, whose $800-plus weekly benefit is the nation’s highest, the new law raises the benefit by about 75%.  (Pennsylvania’s maximum benefit of $572 per week and is one of the higher maximums.)  A number of unemployed workers may receive more in UC under RWACA than their wages from past employment.  This benefit increase will only be temporary until July 31, 2020. 

How soon are benefits available under the new law?

The law makes UC available more quickly.  The law eliminates the waiting week that many states imposed.  Under the waiting week, a worker laid off on the first day of the month would begin collecting UC on the eighth of the month.  (Pennsylvania had already acted to eliminate the waiting week.) 

How will the new law affect government and nonprofit employers?

RWACA also addresses the needs of nonprofits and government employers who do not buy unemployment insurance but reimburse the state UC authorities for any UC claims.  RWACA provides that the federal government will reimburse up to 50-% of state UC payments for unemployed public and nonprofit workers, thereby reducing the private entities’ reimbursement obligations.

What key areas of UC law have not changed?

RWACA has not changed every aspect of UC law. A worker must still be able and available to work before collecting UC.  To receive UC, a worker must still show a job loss or work hour drop- mainly through layoffs or reductions in force driven by economic factors.  Those who can telework are not eligible for UC.  Nor are those on sick leave.  And workers must be out of work though no fault of their own. 

Employers may still oppose UC, and states can deny UC, when an employee has been let go for willful misconduct (generally violation of a major rule, or deliberate conduct that goes against the employer’s interests or falls below acceptable standards of employee behavior.)

In summary, RWACA’s changes are dramatic. And the workload for federal and state UC agencies will increase dramatically.  The next several weeks will see a continued flood of UC claims and an even greater need for both accuracy and patience for all participants in the UC system.

The coronavirus pandemic means news and information is constantly-changing and evolving every minute. The employment and business lawyers at High Swartz know how important it is to keep everyone informed with current and valid information during these trying times. If you have questions about the pandemic-related query relating to your job or business, please contact our employment law attorneys at 610-275-0700 or fill out our contact form.

We know how hard hit our areas have been hit during this pandemic. Our local law offices in Montgomery County and Bucks County Pennsylvania can help guide those most affected by offering guidance at any time