If you owe money for child support your stimulus check cannot be garnished. Since the delivery of the first stimulus check some rules have changed so it is a good idea to know what your rights are when you receive a new payment.
Now that the second stimulus check is being delivered according to the pay groups, tens of millions of Americans will receive $600 per person. However, you need to be aware of the changes in qualifications and the new income limit that could prevent many people from receiving another payment.
While anyone has the right to spend their money however they want, there are still some concerns so we will help you resolve them as the IRS continues to send new payments through Jan. 15 via direct deposit, physical checks and EIP cards. After that date those who have not received their check will have to claim it on their tax return.
If you owe money for child support your stimulus check cannot be confiscated
Under the CARES Act, stimulus money may be seized by state and federal agencies to cover back child support. However, your second stimulus check cannot be taken if you owe child support. This change with the new payment is widely understood by federal and state agencies. However, there may be exceptions.
Banks and creditors cannot garnish your deposit, with one exception
With the first stimulus check, banks and private creditors were able to garnish a payment to cover an outstanding debt. However, some states, such as California, issued orders prohibiting banks and creditors from garnishing your stimulus check. With the second stimulus check, your payment is protected from being garnished by banks, creditors, and private debt collectors, according to the text of the law.
However, there is one important caveat: Individual banks can decide whether they want to use your stimulus direct deposit to cover overdraft expenses, according to a report in The New York Times. That’s because for most people, the stimulus check is deposited into the same bank account where they also receive tax refunds.
Banks such as Citigroup, Bank of America, JPMorgan Chase and Wells Fargo said they would temporarily set their customers’ negative balances to zero so they could access the stimulus money. Some regional and community banks are seizing that money to pay overdraft fees, or are considering customers’ requests on a case-by-case basis, according to the Times. If this happened to you, you should contact your bank to request a temporary overdraft exception, although this may not happen.
The government will not record your first or second stimulus check
Because the IRS does not consider the stimulus payments to be income, this means that you will not be taxed on the stimulus money and the IRS will not levy you to pay back tax debts.
A direct payment you receive will not reduce your tax refund in 2021 or increase the amount you owe when you file your 2020 tax return.
You also won’t have to pay back part of that stimulus check if you qualify for a smaller amount in 2021.
If you do not receive all the money owed to you this year, you can claim the full amount of your stimulus check as a Recovery Refund Credit on your 2020 federal income tax return when you file in 2021.
You don’t have to file a tax return to get a stimulus check
Although taxes play an important role in determining stimulus check eligibility, you do not need to have filed a tax return to be eligible for a check. If you are over 65, for example, and receive Supplemental Security Income or Social Security Disability Insurance, you may still qualify for a stimulus check under the CARES Act as well as the second check. However, you may have to go a step further to apply for your payment and receive your check.
Homeowners and nursing homes cannot take your stimulus money
The CARES Act prevented landlords from requiring you to give them your rent incentive check. Nursing homes and care facilities also can’t ask you to turn in your stimulus check to make a payment, according to the IRS.
The second stimulus check follows the same rules. If someone pressures you or threatens to evict you in exchange for your payment, make sure you know your rights regarding stimulus checks and the moratorium on eviction that lasts until January 31. The $900 billion stimulus legislation includes rental assistance for states and cities.
If your check payment is late, the stimulus money will not be confiscated
If you have to make a deposit or a monthly payment such as a car, you are not required, in most cases, to hand over the stimulus money unless you have some exceptions.
If you don’t get the first check yet, you can claim a refund
S f you were entitled to receive a first check but have not yet received a direct deposit, a check or an IRS EIP prepaid debit card, you may have been missed in error or have a problem that you need to resolve. Certain groups who are entitled to that first payment, such as some seniors, retirees, SSDI recipients, non-citizens, and those who are incarcerated, may file a request for payment in 2021.
If you didn’t receive your second check in mid-January, you will be able to claim your taxes in 2021
To get your money, you must take a Recovery Refund Credit when you file your 2020 federal tax return, which is due April 15.
When you file a 2020 Form 1040 or 1040SR, you will get a refund for the amount of money you lost in the first round. This credit would increase the amount of your tax refund or decrease the amount of tax you must pay on the stimulus money you still owe.
Incarcerated persons will be able to claim their stimulus check
Although there was a lot of confusion at first, people who are in prison are eligible for the first stimulus check of up to $1,200 per adult.
According to the Washington Post, a judge’s ruling in California during the fall required the IRS to contact incarcerated individuals who can file a claim for a stimulus check. The deadline for filing a claim in 2020 has passed. As with others who haven’t received a payment, the IRS said that if you don’t receive a payment by Dec. 31, you can claim it as a Recovery Refund Credit in 2021 by filing a 2020 Form 1040 or 1040-SR.
Cases where you will need to return the check
If the IRS mistakenly sent you more money than you qualify for or if you receive money from a person who died, the agency has mentioned that you will have to pay that money back.