While nearly 80 million Americans received a stimulus check from the federal government this week, many did not receive what they had expected or hoped.
The Coronavirus Aid, Relief, and Economic Security Act (CARES), the legislation passed by Congress to pump money into the economy following the COVID-19 pandemic, has, with a couple of exceptions, barred the Treasury Department from taking any of the $1,200 stimulus payments most adults received to pay other debts.
Usually, the Treasury Department, using the Treasury Offset Program (TOP), can seize 100% of any tax refund you are due in order to pay back taxes owed, child support or certain other debts.
Here is what the CARES Act allows the Treasury Department to seize, or not seize, from stimulus payments:
Child support
The CARES Act allows the Treasury Department to reduce the $1,200 stimulus check most adults would be receiving for delinquent child support payments.
Under the act, if a person is behind in child support payments, the money will be taken out of stimulus checks up to the full amount of the check.
The money will be seized if you are behind on your payments if your state has referred those payments to the federal government for collection.
Some spouses who have filed joint tax returns with the person delinquent in their child support payments are seeing their part of the stimulus payment being cut or withheld altogether.
If your spouse is behind in child support and your stimulus check has been seized, you can file for injured spouse relief to get a portion of your stimulus payment back. You must file an injured spouse form (Form 8379) with the IRS. It does not have to be filed with a tax return, you can file it right away.
The economic hardship of the person ordered to pay child support will be not be considered when it comes to seizing the payments, according to the CARES Act.
Tax debt
Stimulus payments cannot be seized to pay a tax debt.
Private debt collections
Private debt collectors can try to garnish stimulus payments. If you are not current in your payments for court-ordered debt payment, debt collectors can come after your stimulus payment and other money you have in a personal bank account. Some states have passed legislation preventing debt collectors from issuing new garnishment orders, at least for a time.
Bank debt
If you owe money to a bank, for instance in overdraft fees, your stimulus check could be seized by the bank.
Defaulted Student Loans
If you are behind on student loan debt, your stimulus payments will not be seized. In addition, payments on federal student loans are suspended with zero percent interest until Sept. 30.
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