Saturday, September 23, 2023

Will 3rd Stimulus Be Garnished

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Questions And Answers About The Third

When will stimulus checks be deposited? Can checks be garnished? We asked the experts
  • IRS Statements and Announcements
  • These updated FAQs were released to the public in Fact Sheet 2022-22PDF, March 25, 2022.

    If you didn’t receive, or get the full amount of, the third-round Economic Impact Payment, you may be eligible to claim the 2021 Recovery Rebate Credit and must file a 2021 tax return even if you don’t usually file taxes to claim it. Your 2021 Recovery Rebate Credit will reduce any tax you owe for 2021 or be included in your tax refund.

    If your income is $73,000 or less, you can file your federal tax return electronically for free through the IRS Free File Program. The fastest and most secure way to get your tax refund is to file electronically and have it direct deposited, contactless and free, into your financial account. You can have your refund direct deposited into your bank account, prepaid debit card, or mobile app, and will need to provide routing and account numbers.

    If you didn’t get the full amounts of the first and second Economic Impact Payments, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if you don’t usually file taxes to claim it. DO NOT include any information regarding the first and second Economic Impact Payments or the 2020 Recovery Rebate Credit on your 2021 return.

    Why didn’t I receive the third-round Economic Impact Payment if I received the first and second one?

    What can I do if I think the amount of my third-round Economic Impact Payment is incorrect?

    Can Debt Collectors See Your Bank Account Balance

    While a creditor cannot easily look up your bank account balance at will, the creditor can serve the bank with a writ of garnishment without much expense. The bank in response typically must freeze the account and file a response stating the exact balance in any bank account held for the judgment debtor.

    How Will Dependents Get Their Stimulus Check

    One major difference between this round of checks and the last two is that dependents of any age are eligible to get money.

    But to be clear: Eligibility for a stimulus check lies with the person who claims the dependent on their tax return. In most cases that’s a parent or caregiver. They’re the person who qualifies and gets paid. An additional $1,400 is added to that person’s check for each dependent with a Social Security number who is claimed on their tax return.

    According to the IRS, adults who rely on another person for more than half of their expenses can be claimed as a dependent. That includes students up to age 19, or age 24 for full-time college students. Dependent adults can also include disabled people and retirees.

    Recommended Reading: Irs Where’s My Second Stimulus Payment

    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.

    How Other Eligibility Changes Affect Your Stimulus Check

    Can 3rd Stimulus Check Be Taken For Back Child Support

    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.

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    What Can Garnish Your Stimulus Check

    $1,400 stimulus checks can be garnished for unpaid debts.Some states are working to prevent that

    • If you have unpaid private debts that are subject to a court order, your $1,400 stimulus check could be garnished.
    • The American Rescue Plan Act did not protect the one-time direct payments for people in those circumstances.

    How Will I Get The Third Stimulus Check

    Most will arrive via direct deposit others will be mailed as a paper check or a prepaid debit card.

    Exactly how much money you get and how it’s delivered depends on the information provided on your 2020 tax return. If it hasn’t been filed or processed yet, the IRS will look at your 2019 return.

    In most cases, your payment will be delivered to the bank account or mailing address that’s listed on your tax return. If you used the nonfilers tool because you don’t file taxes, the IRS will use that same information to deliver your third payment, either to your bank account or address.

    Social Security retirement and disability beneficiaries, railroad retirees, and people who received veterans’ benefits in 2020 don’t need to do anything to get the third stimulus check. They will get their payment the same way they normally receive benefits.

    The IRS’s “Get My Payment” tool is the only place to check how and when your payment is going to be sent .

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    The Benefits Of A Debt Management Program

    Verify: Yes, the third stimulus check can be garnished for private debt

    When you enroll in a debt management program, creditors and collectors agree to accept payments through Consolidated Credit. This means they have a formal plan in place that shows when they will get paid. As a result, they are less likely to sue you in court or pursue other collection actions, such as garnishment.

    Collectors take actions like civil lawsuits and wage garnishment when they believe thats the only way that they will get paid, Herman says. Enrolling in a debt management program shows creditors and collectors youre serious about repaying your debt. If they know theyre going to get paid, then youre less likely to face these severe measures.

    A debt management program can also help minimize some of the other negative effects that can bring. For example, most creditors agree to bring past-due accounts current after three payments. This can help stop credit history damage much sooner than if you must repay the full amount owed.

    Its the right time for people to find a solution for their debt, Herman encourages. You may be able to protect your stimulus and set up an affordable repayment plan. Our team is also helping our clients make extra payments when they want to use part of a stimulus to pay off debt. That way, the money can be used in the most efficient way possible.

    Talk to a certified credit counselor to see if a debt management program is right for you.

    Read Also: How Do I Get The Stimulus Check

    Stimulus Check Update: Some Payments Could Be Garnished


    The second stimulus package had a specific provision to protect payments from garnishment, while the first stimulus bill allowed the garnishment of stimulus money only for back child support. The third stimulus bill does not similarly protect debtors.

    While the $1,400 payments cant be garnished for back taxes or child support, for example, according to the Tax Foundation, the payments can be garnished for private debts, such as judgments from a credit card company or other creditor.

    We believe it is imperative that Congress ensure that these next stimulus payments are treated as benefits subject to the federal exemption from garnishment, the letter said. Otherwise, the families that most need this money those struggling with debt and whose entire bank accounts may be frozen by garnishment orders will be not be able to access their funds. This group includes very low-income families with children, people who have been disconnected from work opportunities for a long period, and many low-income adults now raising children in their homes.

    Congress would need to pass new legislation to protect the funds from garnishment, the groups said, noting that without it, financial institutions will have no choice but to comply with court orders and hand stimulus funds over creditors who have won judgments.

    Sen. Ron Wyden said Tuesday he would offer up separate legislation to protect the payments from garnishment.

    Collins called it unfair to treat taxpayers differently.

    Banks And Creditors Might Be Able To Take Your Stimulus Checks In This Situation

    With the first stimulus check, private banks and creditors were able to seize your payment to cover an outstanding debt. However, some states, such as California, issued orders forbidding banks and creditors from garnishing your stimulus check. With the second stimulus check, your payment was protected from bank garnishment and from private creditors and debt collectors, according to the text of the law. The third check is also supposed to be protected from bank garnishment, though not from private creditors and debt collectors.

    However, theres one major caveat here. Individual banks can decide whether they want to use your stimulus direct deposit payment to cover overdraft fees, according to a New York Times report. This is because, for most people, their stimulus check is deposited into the same bank account where they also receive tax refunds.

    Although for the second check large US banks including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo said they would temporarily zero out their customers negative balances so that they could access their stimulus money, some regional and community banks still garnished that money to pay overdraft fees, or were considering customer requests on a case-by-case basis, according to the Times. If this has happened to you, you can try contacting your bank to ask for a temporary overdraft waiver, but it may not be granted. This is likely to be the case for a third check as well, Watson said.

    Read Also: Irs Stimulus Check Get My Payment

    Can My Recovery Rebate Credit Be Garnished

    The first and second rounds of stimulus checks authorized in March 2020 and December 2020 were protected from federal and state debt offsets, and even private debt collectors in some cases.

    Unfortunately, the same protections don’t apply when these payments are claimed as the Recovery Rebate Credit on your 2020 return. Remember, you can only claim the credit if you’re missing a stimulus check you qualify for, or you received too little based on your 2020 income and tax situation.

    Your stimulus tax credit can be used to offset state or federal debts, like past-due child support . Your credit cannot be used to offset federal taxes you owe for prior years, according to guidance .

    Will Dead People Get A Third Stimulus Check

    How To Know If My Stimulus Check Was Garnished

    Under the proposals before Congress, anyone who died before January 1, 2021, would not be eligible for a third stimulus check. They would be treated as if they don’t have a Social Security number.

    If a person who died before 2021 was married and a member of the U.S. military, the surviving spouse could still receive a third stimulus check even if he or she doesn’t have a Social Security number.

    However, the extra $1,400 per dependent won’t be available if a single parent died before 2021 or, in the case of a joint return, both parents died before then.

    Recommended Reading: When My Stimulus Check Will Be Deposited

    Can The Irs Make You Return Your Stimulus Check Money

    The IRS said a payment you get this year wont reduce your tax refund in 2021 or increase the amount you owe when you file your 2020 tax return. You also wont have to repay a stimulus payment if you qualify for a lower amount in 2021.

    However, if the IRS thinks it mistakenly sent you more stimulus check money than you qualify for, or if you received money in your check for someone whos died, the agency expects you to return the payment.

    The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

    How Much Should My Payment Be

    The amount of the payment depends on your income.

    • For the third round of stimulus checks: Most individuals earning $75,000 or less received a payment of $1,400. Married couples who filed taxes jointly and earned $150,000 or less received a payment of $2,800. Families were eligible to receive an additional $1,400 per dependent. For this round of stimulus checks, the eligible dependent did not need to be under the age of 17. For example, a family of 4 could have received $5,600. Use our stimulus check calculator to see how much your family could expect from the third round of stimulus checks.
    • For the second round of stimulus checks: Most individuals earning $75,000 or less received a payment of $600. Married couples who filed taxes jointly and earned $150,000 or less received a payment of $1,200. Families were eligible to receive an additional $600 per child. For example, a family of 4 could have received $2,400.
    • For the first round of stimulus checks: Most individuals earning $75,000 or less received a payment of $1,200. Married couples who filed taxes jointly and earned $150,000 or less received a payment of $2,400. Families were eligible to receive an additional $500 per child. For example, a family of 4 could have received up to $3,400.

    Individuals and married couples that made more than the amounts above may still have been eligible for a payment. Use our stimulus check calculator to see if you were still eligible for a payment.

    Recommended Reading: Stimulus Check Status

    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.

    The Current Plan For A $1400 Third Stimulus Check

    Third stimulus checks: Who is eligible? And can the money be garnished by creditors?

    We’re one step closer to a third stimulus check now that the House of Representatives has passed President Biden’s $1.9 trillion stimulus package. One of the key provisions in the president’s massive “American Rescue Plan” would authorize another round of stimulus checks for most Americans. The stimulus package which is moving through Congress in the form of a budget reconciliation bill is now being considered by the Senate, and Democratic lawmakers are pushing for final passage before March 14.

    However, there could be changes to the current stimulus check plan before a final reconciliation bill is signed, sealed, and delivered. In fact, Senate Democrats have already tweaked the payment phase-out rate. But the general framework is likely to remain the same. That means we can start providing probable answers to some of the questions Americans have about the next round of stimulus checks. We’re also able to offer a handy Third Stimulus Check Calculator that lets you see how much money you would get if the current proposal is ultimately enacted . Having this information in advance can help you prepare your finances for the future if this current plan makes it to the finish line with little or no changes.

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    How To Protect Your Stimulus Check From Creditors

    You’ve likely already thought through the most obvious way to protect your economic recovery paymentâbut you’ll want to protect yourself, too. Here are the steps.

    • Opt for a mailed stimulus check when possible and cash it.
    • Withdraw any stimulus payment deposited into your bank account as soon as possible. If a levy is in place before you make the withdrawal, you could lose your money .
    • Spend the cash on necessary items, such as food, utilities, rent, or mortgage payment, and keep good records.

    If the IRS already has your account information, you can expect a direct deposit. You can check using the IRS “Get My Payment” tool. If it prompts you to provide your bank account number, but you’d prefer a paper check, don’t supply it.

    Important Tip. Purposefully depriving creditors of payment can be fraudulent. However, you’re entitled to use your assets to provide basic life needs for you and your family. Plus, the purpose of stimulus payments is to lessen the financial impact of the coronavirus outbreakânot to pay down creditors. So while it’s unlikely that you’ll run into a problem, keeping good records will help.

    Also, history has shown that when collecting gets harder, creditors become creative. So stay transparent.

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