Please ensure Javascript is enabled for purposes of website accessibility

Here's Who's Suing the U.S. Treasury Over Stimulus Checks

By Christy Bieber - May 14, 2020 at 6:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Millions of families are missing out on stimulus money, but multiple lawsuits seek to change that.

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, stimulus payments of $1,200 per adult and $500 per dependent child are being made available to most individuals and families.

However, families with mixed immigration status were excluded from receiving COVID-19 stimulus payments due to a requirement in the bill that the money go only to taxpayers who file returns with Social Security numbers. In particular, with joint returns, both spouses have to have a Social Security number.

Those who were left out have now turned to the federal courts, arguing it's unconstitutional to deprive them of the funds every other American received. 

U.S. Capitol Building

Image source: Getty Images.

Millions of families have been left without stimulus funds

Under the CARES Act, U.S. citizens who file joint tax returns with spouses who use Individual Taxpayer Identification Numbers (ITINs) will not receive any stimulus payments. This includes most citizens married to immigrants. 

These citizens are deprived of the $1,200 they would normally be due for their own portion of the stimulus payment. They also lose out on the $500 they'd normally receive for eligible dependent children who are citizens. 

Although the CARES Act created an exception to this rule for military families, around 1.2 million citizens are married to immigrants with no Social Security numbers, and most are not covered by this carve-out. They're effectively excluded from the stimulus payments because of whom they are married to and have few options to fix the problem.

Citizen spouses can get a stimulus check by filing a tax return as married filing separately, but this isn't always possible or advisable. Some families have already have filed joint returns for 2019 and would have to amend their returns to file separately. "Married filing separately" status also has other tax consequences, including eliminating eligibility for or curtailing certain deductions and credits such as the following:

  • The Adoption Tax Credit
  • The American Opportunity Tax Credit
  • The Child and Dependent Care Tax Credit
  • The Earned Income Tax Credit
  • The Lifetime Learning Tax Credit
  • The Student Loan Interest Deduction
  • Deductible contributions to traditional IRAs
  • Contributions to Roth IRAs

This means millions are being forced to chose between missing out on a stimulus payment during the coronavirus recession and missing out on tax breaks that could save them hundreds or even thousands of dollars. 

Affected families are turning to the federal courts, but any relief will take time

Some affected families aren't simply accepting their fate and giving up on getting their stimulus funds.

Instead, multiple lawsuits have been filed -- including a proposed class action in the Northern District of Illinois on behalf of these citizens with immigrant spouses and another in Maryland on behalf of citizen children who will see no stimulus money because their parents are not citizens.

Plaintiffs argue the denial of stimulus funds to these citizens because of their spouses' or parents' immigration status is intentional, unlawful, and discriminatory. Their complaints also allege their exclusion is unconstitutional as a violation of the equal protection clause.

They're asking the court to rule they're entitled to receive this money just as every other American is. If the court finds in their favor and declares the CARES Act's provisions excluding them cannot stand, the IRS may be sending out a lot more stimulus money in the future.

Other sources of aid are available

The lawsuits aiming to help mixed-status families get COVID-19 stimulus payments will take time to resolve.

For families struggling today amid the coronavirus crisis, other sources of aid may be available, including expanded unemployment benefits.

These are generally available not only to citizens, but also to others who were legally authorized to work in the United States, so be sure to check your state's guidelines and eligibility rules if your income has been affected by coronavirus. 

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.