If You Owe Child Support, Forget The Stimulus Check. But Back Taxes, Late Student Loan Payments Don’t Disqualify

If You Owe Child Support, Forget The Stimulus Check. But Back Taxes, Late Student Loan Payments Don’t Disqualify

child support
The $2T coronavirus relief bill passed Congress with direct cash payments directed to help people through the crisis, but not if you owe money on child support. President Donald Trump hands a pen to Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, after signing the coronavirus stimulus relief package, at the White House, March 27, 2020, in Washington. (AP Photo/Evan Vucci)

The $2 trillion coronavirus relief bill that passed Congress last week includes direct cash payments to help people through the crisis, but not if you owe money on child support.

The cash transfers are for U.S. residents with a valid Social Security number who reported making less than $99,000 — or couples earning up to $198,000 — on a recent tax return. The one-time payments max out at $1,200 per person with an additional $500 per child. However, the money could be reduced or eliminated for parents overdue on child support who have been reported by the states to the Treasury Department, NBC News reported.

Owing student loan payments or back taxes or other government debt is not a problem, according to Sen. Chuck Grassley, (R-Iowa), an author of the bill and chairman of the Finance Committee.

The legislation “turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, Grassley Wrote in a Medium post.

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Generally, individuals who earn $75,000 or less qualify for $1,200 one-time payments. Couples making $150,000 or less may receive $2,400. Dependent children are eligible for $500 each.

But there’s a catch.

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Eligibility is based on your 2018 or 2019 income as reflected on your tax return — whichever was filed last.

So if you earned above those thresholds in 2018 or 2019 and your work has suddenly evaporated or you’ve been furloughed, you’re out of luck. A record 3.28 million people filed for unemployment last week, according to CNBC.

The fact that eligibility is based on prior years’ incomes that may have nothing to do with people’s current situation is “a real issue,” said Jeffrey Levine, director of advanced planning at Buckingham Wealth Partners in Long Island, New York.

Getting the check also depends on your correct email address and current mailing address being on file with the government.

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The legislation calls for sending the payments electronically to the same accounts you authorized for previous refunds. If you have closed that account since your last tax return, you have a problem.

Some individuals may be forced to file a return if they want a stimulus check, even though they have no obligation to do so, according to Jack Smalligan, senior policy fellow at the non-partisan think tank, Urban Institute.

This especially applies to low-wage workers or individuals with no income who haven’t filed returns, he said. The Treasury Department may ask those individuals to fill out a 1040-EZ form in order to process their information.