JACKSONVILLE, Fla. – A third round of stimulus checks are on the way, but did you know the $1,400 checks can be garnished to pay off debts?
Unlike the first two stimulus bills, which offered protection from debt collectors, the third one does not. The change is because the relief package was passed via budget reconciliation. It allowed Democrats to avoid a possible filibuster from Republicans, but it also opened the door for collectors.
“Those private businesses that you may owe money to have the ability to garnish that amount when it hits your bank account,” explained Mike Ellis, a financial advisor.
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To be clear, stimulus check garnishments only apply to people whose debts have gone into collections. And those collections only pertain to private businesses or credit card companies.
Ellis says if you have accounts that are in collections, the best thing to do right now is call the collections agency in advance.
“Let them know: I’m in a need here. Please work with me so you don’t garnish what’s been deposited into my account,” Ellis explained.
The financial advisor brought up three of the most common questions he gets when it comes to the stimulus.
“Probably the biggest one is: ‘Hey, I didn’t get one of the last ones. What do I do?’” he said.
Ellis explained that when filling out your taxes, there will be a place to mark that you haven’t received it. Then, you’ll get it as part of your tax refund.
Question number two:
“If the IRS says I did get my stimulus check but I didn’t, what do I do?”
The IRS has a section on its website that deals with the first and second payments. It will soon have an additional section for the 2021 Economic Impact Payment.
The third question: Will I get a stimulus check?
The legislation provides a direct payment of $1,400 for a single taxpayer, or $2,800 for a married couple that files jointly, plus $1,400 per dependent. Individuals earning up to $75,000 would get the full amount, as would married couples with incomes up to $150,000.
The size of the check would shrink for those making slightly more, with a hard cut-off at $80,000 for individuals and $160,000 for married couples.
A child tax credit will also be included for the first time: $3,000 for people with children ages 6 to 17, and $3,600 for children under 6. The money, however, will be paid out in installments of $300 per month starting in July until the end of the year.
While the IRS has not come out and said exactly when the money will hit bank accounts, it’s safe to assume it will be done similarly to the first two rounds, with payments first going out to those with direct deposit and eventually trickling down to sending out paper checks.