By Mike Stetzer
Many individuals are likely looking forward to enjoying the tax rebate that the Bush Administration enacted through the Economic Stimulus Act of 2008. Whether they plan on rushing out to buy a new iPod or of flat-screen TV, paying off credit card bills or using the money to take a family vacation, so many people experiencing the financial belt-tightening needed during the current recession will be glad to have that small influx of cash.
If you or your spouse has unpaid child support, you can expect the stimulus payment amount for which you are eligible to be diverted to cover this debt, just like any other past-due or non-tax federal debt - a past-due student loan is another example of this type of debt.
If you are an individual filing a tax return who qualifies for the highest rebate amount, $600, and you owe $600 or more in unpaid child support payments, then all of the amount will be diverted to pay the child support in arrears. If you owe less, then that amount will be diverted, and you will receive the remaining amount.
Filing federal taxes jointly is a strategy that can save you money through tax incentives and other provisions. It can also mean that a rebate for which both spouses are eligible may go to paying child support for one spouse.
If you or your spouse is affected by debt obligations that will divert the entire amount of your economic stimulus check-which could be up to $1800 if you have eligible children-the party who is not responsible may be able to reclaim the amount that they would receive under normal circumstances by filing for "injured spouse" status.
To receive this status, you or your spouse must file Form 8379, Injured Spouse Claim and Allocation. The form requires you to divide your income, assets and obligations according to spouse, in order to determine what percentage of the tax rebate you as an individual are entitled to, up to 50%.
Form 8379 may be filed either with your tax return or separately. The Office of Child Support Enforcement at the U.S. Department of Health and Human Services has a helpful guide to applying for injured spouse status, with concrete examples and detailed provisions.
If you know that your spouse misreported items on your joint tax return that would change your eligibility for a stimulus check, then you may file a different form, Form 8857, Innocent Spouse Relief.