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Expecting stimulus money with your tax return? Here are your rights

Most people get to keep their stimulus check. But there are some new rules that may affect who can garnish your payment, especially if it comes with your tax refund. Here are your rights when it comes to your money.

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Who can garnish your stimulus check? We'll tell you.

Sarah Tew/CNET

If your second stimulus check never arrived, you might be getting ready to file for any missing money for yourself or your dependents on your 2020 tax return starting this Friday. But while the bill governing the second check largely protected your money from being garnished to pay debts, a new change could mean that the government may be able to use the catch-up payment in your tax refund to cover those debts after all -- so your payment wouldn't be protected the same way it would have been if your check had arrived as planned through the maildirect deposit or EIP card

Other questions may also be lingering: Will you get taxed on your first or second stimulus check this year? Could states, banks, creditors or your landlord take your money to cover a debt? Could your second check or your tax refund credit be garnished to pay overdue child support? What happens if the IRS sent you too much money by accident

We've got all of the information you need, whether your check already arrived or if you need to claim it on your 2020 tax return as a Recovery Rebate Credit. Plus, here's what we know so far about a potential third stimulus check in the next few weeks, which could be $1,400 for adults and possibly dependents, too. If you don't receive your check, you may need to contact the IRS, and potentially request a payment trace. This story was updated recently. 

Your second check can't be taken to pay overdue child support. But your tax return and Recovery Rebate Credit could be

Under the CARES Act from March 2020, your first stimulus check could be seized by state and federal agencies to cover past-due child support. That rule changed with the second stimulus check, which couldn't be taken if you owe money for child support -- a shift that's been widely understood across federal and state agencies.

However, these rules have not necessarily extended to the situation of filing for missing stimulus check money on your 2020 tax return. For certain outstanding debts -- including past-due child support and unpaid student loans -- the IRS can withhold some or all of your unpaid stimulus payment issued as a Recovery Rebate Credit when you file your taxes. An independent taxpayer advocacy group within the IRS is working with the agency to address this issue.

Here's everything to know about stimulus checks and child support. It isn't yet clear if garnishment rules would further change for a third stimulus check.

Banks and creditors could take your second stimulus check 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 is protected from bank garnishment and from private creditors and debt collectors, according to the text of the law

Now playing: Watch this: Stimulus check No. 3: What you need to know

However, there's one major caveat here. Individual banks can decide whether they want to use your stimulus direct deposit 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

Though 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 can access their stimulus money, some regional and community banks are garnishing that money to pay overdraft fees, or are 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. 

What about your tax return and claimed stimulus money? Federal law allows only state and federal government agencies to take your refund as payment toward a debt, not individual or private creditors. But again, this changes once you deposit your refund into your bank account, when private creditors may have access to those funds, depending on your state. 

Your stimulus checks will not get taxed, but there is one exception

The IRS doesn't consider stimulus payments to be income, which means you won't be taxed on your stimulus money. That also means a direct payment you get this year won't 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 repay part of your stimulus check if you qualify for a lower amount in 2021. If you didn't receive everything you were owed this year, you can claim your full stimulus check amount as a Recovery Rebate Credit on your 2020 federal income tax return when you file this month (more on that below).

However, another big caveat here: If you are filing for any missing stimulus money as a Recovery Rebate Credit on your tax return this year, the IRS can potentially garnish that money to pay for any back taxes you owe. Once again, an independent taxpayer advocacy group within the IRS is working with the agency to address this issue to protect those funds for vulnerable taxpayers. 


Is the stimulus money really yours? That depends.

Sarah Tew/CNET

You don't need to file taxes to qualify for a stimulus check, but...

Though taxes do play a role in determining stimulus check eligibility, you don't need to have filed a tax return to qualify for a check. If you're over age 65, for example, and receive Supplemental Security Income or Social Security Disability Insurance, you could still qualify for a first, second and potential third stimulus check. But in some cases, you would have needed to take an extra step, and you will now if you're still waiting on your full payment. If you didn't receive some or all of the money you were entitled to, people in this group, termed nonfilers, will have to file a tax return to receive any missing stimulus payment

Landlords and nursing homes can't make you use your stimulus money to pay them

The CARES Act prevented landlords from demanding you give them your stimulus check to make a rent payment. Nursing homes and care facilities also cannot ask you to hand over your stimulus check money to meet a payment, according to the IRS

The second stimulus check follows the same rules. If someone pressures you or threatens you with eviction in exchange for your payment, make sure you know your rights in regards to stimulus checks and to the eviction moratorium that lasts through March 31. The $900 billion stimulus legislation from December includes rental assistance for states and cities. 

Your stimulus check can't be taken to pay a late car payment

Likewise, people who are worried about car repossession if they can't make a payment are in most cases not obligated to hand over stimulus money, unless it falls into an exception below. Here's what we know about missed car payments during the coronavirus pandemic.

If your first or second stimulus check never arrived, you can apply for a rebate on your taxes

If you were eligible for a first or second stimulus check but still haven't received a direct deposit, check or prepaid EIP debit card from the IRS, you may have mistakenly been overlooked, or you may have a problem that you need to resolve. Certain groups who were eligible for that first payment, such as some older adults, retirees, SSDI recipients, noncitizens and those who are incarcerated, can file a claim for payment.

Even if you don't typically file taxes, you'll have to submit a 2020 tax return (the deadline for which is currently April 15) using a 2020 Form 1040 or 1040SR to claim your money. This credit would either increase the amount of your tax refund or lower the amount of the tax you need to pay by the amount of stimulus money you're still owed. 

Again, just be aware that if you do file for a Recovery Rebate Credit and owe any back taxes, the IRS may garnish that money to pay those debts.

If you got a letter from the IRS confirming either your first or second payment, but never actually got the money, you can try filing a Payment Trace through the IRS to track it down


If you owe child support, all or part of your stimulus check could be used to cover the expense.

Sarah Tew/CNET

Incarcerated people can also claim their stimulus check 

Though there was a lot of confusion about this at first, people who are in prison and jail are eligible to qualify for the first stimulus check of up to $1,200 per adult. A ruling this fall from a federal judge in California required the IRS to contact those incarcerated who can file a claim for a stimulus check. As with others who are missing a payment, you'll need to fill out 2020 Form 1040 or 1040-SR to claim either the first or second check.

Can the IRS make you return your stimulus payment?

The IRS said a payment you get this year won't 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 repay a stimulus payment if you qualify for a lower amount in 2021. (Here's how your income taxes influence your payment.)

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 who's died, the agency expects you to return the payment.