Millions of Americans are still desperately waiting on a stimulus check to help combat the economic fallout of the coronavirus pandemic, but those who owe child support may not be able to hang onto the money for long. While most creditors are prohibited from collecting the $1,200 assistance check from the U.S. government, child support is one of the biggest exceptions to the rule. There are a few ways a collector might seek to draw from a person's stimulus check.
The checks that millions of Americans have and millions more are waiting on is officially called an Economic Impact Payment, guaranteed to them by a coronavirus relief bill called the CARES Act. Since the law is specific to this emergency, the money is protected from many forms of debt — even including back taxes — according to a report by Forbes. However, even from the beginning, financial advisers noted that the language of the bill does not prevent the stimulus check from being collected as child support.
According to a report by CBS News affiliate Local 21 News, the government can seize stimulus checks from people who owe child support. The seizure would happen after the check is issued, so those who may have overdue child support should be careful of spending the money after it arrives. The check would only be reduced by the amount of child support owed, according to the IRS.
In some cases, the parent to whom the child support is owed might be grateful that the IRS is taking this step, but others are not. Some parents told Local 21 News about the anxiety of losing that payment, especially at a time with sky-high unemployment rates.
"I just believe it's unfair that I'm not getting the help I needed just because I'm behind on child support," one man said, while a woman added: "Although I love my step daughters, it's not my bill, so that’s a jagged pill to swallow when it’s going to my husband’s ex-wife."
Families are advised to consult with financial advisors about ways to avoid this payment through tax maneuvering, though it may impact their future returns. It may also end up costing more than it is worth, in many cases.0comments
This is just one of the quirks in the process of distributing a stimulus check to nearly every American in the last few weeks. The process was rushed due to the urgency of the need, and in many cases, details fell through the cracks. However, according to Forbes, lawmakers are working hard to fill those gaps, and to ensure they do not exist if another stimulus check is sent out before this crisis is over.