Can Stimulus Checks be Garnished – for Debt or Child Support?

Can Stimulus Checks be Garnished? Will Debt collectors be able to take your third stimulus check? How about unpaid child support payment? In this post, we are going to address the question, of whether stimulus checks can be garnished by creditors.

However, before we get into details about the answer, we will first explain the stimulus package, who is eligible, and when the timeline for when payments will be sent.

Next, we will answer the question about stimulus checks and garnishment.

Lastly, we will discuss the top 5 questions our readers are asking about the stimulus checks and stimulus package in general.

"Can Stimulus Checks be Garnished by Debt Collectors"

This post will cover:

  • What Is a Stimulus Check?
  • How Many Stimulus Checks Have Been Issued?
  • Who is Eligible for the Third Stimulus Check?
  • Can Stimulus Checks be Garnished – for Debt or Child Support?
  • Why The Third Stimulus Checks Can Be Garnished
  • What You Can Do About it
  • Stimulus Check FAQs

What Is a Stimulus Check?

A stimulus check is a check sent to a taxpayer by the U.S. government.

Stimulus checks are intended to stimulate the economy by providing consumers with some spending money.

When taxpayers spend this money, it boosts consumption and drives revenues at retailers and manufacturers and thus spurs the economy.

How Many Stimulus Checks Have Been Issued?

There have been three rounds of stimulus checks issued by the IRS as authorized by Congress to help address issues related to the COVID-19 pandemic.

Here’s a brief summary of each:

First Round of Stimulus for $1,200

The CARES Act, passed by Congress in March 2020, authorized the disbursement of the $1200 stimulus to eligible individuals and $2,400 to eligible couples.

In addition, the eligible children received $500 each.

The IRS issued more than 160 million direct payments to taxpayers, totaling over $270 billion.

Second Round of Stimulus for $600

The second round of stimulus, approved in December, authorized the disbursement of the $600 stimulus to eligible individuals and $1,200 to eligible couples.

Additionally, eligible children received $600 each, an increase of $100 from the first round.

As part of the second round of stimulus, the IRS delivered 147 million payments, totaling more than $142 billion.

Third Round of Stimulus for $1,400

The third round of stimulus, which is part of The American Rescue Plan was approved in March of 2021.

It provides direct stimulus payments, up to $1,400 for individuals, $2,800 for couples, and an additional $1,400 for each dependent regardless of age.

Who is Eligible for the Third Stimulus Check?

Here’s the income limit for the Third Round of stimulus checks signed into law by President Biden.

How much you are eligible for in the third round of stimulus depends on your income.

In general, the IRS will use the most recent tax return information it has on file to determine eligibility for the stimulus payments.

That means that if you are yet to file your 2020 return, your 2019 return will be used.

Here’s the income eligibility for stimulus round three based on Adjusted Gross Income (AGI) from your tax returns:

$1,400 for qualifying adults
2,800 for qualifying couples who file a joint tax return
$1,400 for each dependent child under the age of 17
$1,400 for each qualifying adult dependent

If you’re a single filer, your payment is reduced if your adjusted gross income (AGI) is above $75,000.

For married couples filing jointly, the phaseout begins at an AGI of $150,000. If you file as head of household, the reductions begin at $112,500.

Here is a summary of the income thresholds for the third stimulus payments.

Full $1,400 per person maximum (based on AGI) Not eligible (based on AGI)
Single taxpayer Less than $75,000 $100,000 or more
Head of household Less than $112,500 $150,000 or more
Married couples filing jointly Less than $150,000 $200,000 or more

The payments are based on either 2019 or 2020 income.

If you have filed your 2020 tax returns already, your 2020 income will be used to determine your eligibility for the $1,400 stimulus payment.

One of the top questions we have received from our readers is whether the third round of stimulus payments can be garnished by creditors.

Continue reading for the answer:

Can Stimulus Checks be Garnished – for Debt or Child Support?

The answer is complicated.

Just like in the past, these stimulus checks can’t be garnished by the federal government or the IRS.

First, the $1,400 stimulus payments would be protected from an outstanding tax debt or debt collected by governments including child-support offsets

However, other forms of debt, including state taxes and private lending, are still vulnerable to garnishment.

This means that private companies and debt collectors can garnish your stimulus check, depending on the type of debt you owe.

For example, If you’re behind on credit card payments and the credit card company has filed a judgment against you, they will be able to access your stimulus payments.

Why The Third Stimulus Checks Can Be Garnished

Unlike the second stimulus check of $600, which was shielded from debt collectors, the latest Covid relief bill did not include that protection.

That is because of the procedural rules Democrats used to push the bill through the Senate.

Additionally, the first stimulus checks of $1,200 were also not shielded from private debt collectors.

A standalone Senate bill that would have shielded the payments was passed by unanimous consent a few months later but was not taken up by the House.

Private Companies Can Seize Stimulus Checks

According to a report by CNN, the $1,400 round of stimulus payments that started going out are open to being seized by private debt collectors.

Stimulus Recipients with unpaid credit card or medical bills for which a company has obtained a judgment against the debtor could see their stimulus checks taken from their bank accounts.

Therefore, for now, it is possible debt collectors could seize the money that the federal government is directly depositing into people’s bank accounts.

Congress May Do Something About it

This issue has caught the attention of Congress.

Nineteen financial groups signed a letter to Secretary of the Treasury Janet Yellen urging Congress to pass a stand-alone bill that would protect these checks from being garnished.

Additionally, Sen. Ron Wyden, a Democrat from Oregon, plans to introduce a fix that would shield the payments from garnishment soon.

What You Can Do About it

Since it is not possible to change your bank account information with the IRS before the stimulus direct deposit is sent, there is little you can do to prevent the funds from getting taken.

One option is to close your bank account.

However, closing your account would likely mean that you will have to wait longer to receive your stimulus check.

Cash Paper Checks Quickly

If you received a paper check from the IRS for your stimulus payment and are worried about garnishment, here’s what you can do:

You should cash your check at retail stores or check cashers instead of through a bank.

You may incur higher fees by doing so, but it is a safer option to make sure you get the most of your stimulus money.

Stimulus Check FAQs

Here are the top questions about the Stimulus Check, including what to do if you did not get the first or second stimulus.

Which Tax Return will be used to Calculate the Stimulus Check Amount?

The income limits for the third stimulus check will be based on a taxpayer’s most recent return.

Therefore, if you have already filed a 2020 return by the time the stimulus payment is sent, the IRS will base your eligibility on your 2020 adjusted gross income.

However, if you are yet to file your 2020 return, then the IRS will use your 2019 return.

If you do not file a tax return, you can use the IRS “Get my payment” portal to provide the IRS with relevant information they need to determine your eligibility.

See our post on how to use the IRS Stimulus Check Portal.

Can I choose what account I want my check to de deposited?

Unfortunately, you cannot choose the account where your stimulus payment will be deposited into. Here’s how the process works:

The IRS will use the latest information they have on file for you from your last tax refund.

If you did not receive a refund or the IRS does not have your bank information on file, they will use information from your 2018 or 2019 tax return.

That is how the IRS will determine the account where your stimulus will be deposited, or they will mail to your recent address file.

Is stimulus check taxable?

No. Similar to the first and second stimulus payments, the third round of Economic Impact Payments are not taxable and you do not have to pay income taxes on them.

That is because they are considered tax credits, not income, so you will not have to report them as income when you file your tax returns.

Also, any tax refund you are owed this year or next will not be reduced because of the stimulus checks you received.

Will Social Security and Disability Beneficiaries get a Stimulus Check?

Yes. According to ABC News, here is a full list of who will be eligible to get a stimulus check:

  • Those who filed 2019 or 2020 taxes.
  • Those who receive
    – Social Security retirement
    – Survivor or disability benefits (SSDI)
    – Railroad Retirement benefits
    – Supplemental Security Income (SSI)
    – Veterans Affairs benefits
  • Those who received a previous stimulus check will be automatically included in this round of stimulus if they meet income requirements.

What does the Stimulus Debit Card look like?

Your EIP Card will be mailed to you at the most recent mailing address filed with the IRS.

Your EIP Card will arrive in a white envelope that prominently displays the U.S. Treasury seal and includes “Economic Impact Payment Card” in the return address.

Additionally, the envelope also states that it contains “Important information about your Economic Impact Payment.”

The card itself will say “Visa” on the front and “MetaBank” (the issuing bank) on the back.

For what the card looks like, see the image below:

"What does the Stimulus Debit Card look like"

Can Stimulus Checks be Garnished Summary?

We hope this post on the question – Can Stimulus Checks be Garnished was helpful.

If you have further questions about Stimulus Checks, Social Security, or Disability benefits, please let us know in the comments section below.

Be sure to check out our other articles on:
The IRS Stimulus Check Portal 
IRS Stimulus Check Phone Number – 2021
Third Stimulus Check FAQs
Are Stimulus Checks Considered Taxable Income?
Second Stimulus check for $600: Update
How to Stop Social Security Scam Calls
How to Login my Social Security Account
Direct Express Dispute Resolution Help
2022 Social Security Payment Dates