The US government sends a stimulus check to the taxpayers to increase consumption and improve the economy. The US Congress has introduced three stimulus payments to provide help to the citizens of the country. Since the whole world is facing the COVID-19 pandemic, the citizens are facing many financial problems. The objective of the authorization of the stimulus payments is to help the citizens in this challenging period.
Important information regarding stimulus payment
There is a lot of confusion when it comes to child support and stimulus check. All three payments have different rules when it relates to child support. There are some points which every parent should know if they share the custody of their children. In the case of shared custody of children, many confusing questions take place, like if I owe child support, will I get a stimulus check? Every stimulus payment has different rules and regulations. We give you the information related to the impact of child support debt on stimulus payments in the following points:
The US government passed CARES Act in March 2020. It was decided to give $1200 to adults and $500 to the dependents having the age of below 17 years. Henceforth, the payment for the child or spouse was stopped for child support debt.
Coronavirus Response and Relief Supplemental Appropriations Act
The US government passed the act of Coronavirus Response and Relief Supplemental Appropriations in December 2020. It was held that the payment of $600 will be made to adults and dependents having the age of below 17 years as of December 31, 2019. The purpose of these payments was not to stop the payment for child support. If you have not received the payment, you must file a tax return. In this way, you can receive a Recovery Rebate Credit means the whole amount of your tax refund that includes the stimulus payments as well. Offsetting will be done for this payment, and you will receive a stimulus check for child support debt.
American Rescue Plan Act
The US government passed the act of the American Rescue Plan in March 2021. It was decided that a payment of $1400 will be made to every individual and dependent irrespective of age. According to this act, the government will not stop the payment of your child support debt. But there is an ambiguity in how the Internal Revenue Service (IRS) will treat future tax returns.
If there is a requirement to offset your federal payments, you will receive a notice. This notice includes the information regarding when you fulfilled the criteria as per law. If you receive Transitional Employment Assistance for your kids, the full amount of your child support should be a minimum of $150. In the other case, if you have not received receive Transitional Employment Assistance for your kids, the full amount of your child support should be a minimum of $500.
Rules related to child support and all three stimulus checks
Rules for the third stimulus payment
The rules and regulations for the third stimulus payment are different from the first two payments. But it has given the advantage to some parents. The parents receive the same child’s dependent payment. The families with kids have some good news. According to the new stimulus bill, there is an increase in child tax credit. This expansion will diminish child poverty by up to 40%. For qualifying individuals, it is on the top of $1400 checks.
Child support and third stimulus check
If there is some amount due on you for your child support, you can get the full stimulus amount with the third check. This amount is not adjustable against late payments for your child support. This condition is applicable in case of state or federal debt past-due payment in which there is no deduction or offsetting with your third payment. Furthermore, IRS has the right to hold your stimulus amount fully or partly when you claim Recovery Rebate Tax while paying your tax. IRS is trying to sort out this issue with the partnership of an independent taxpayer advocacy group.
Instructions regarding the eligibility of third stimulus payment
The total amount for the third stimulus check must be $1400. The individual can qualify for a third stimulus payment irrespective of age. It means that there is no restriction of age in this case.
Important details related to child tax credit
If you qualify for the threshold as a taxpayer, you will get paid up to $3600 per child from the child tax credit in 2021. The parents of dependent kids can use a similar method of tax filing as per Consumer News and Business Channel (CNBC). But there is no instruction regarding the payments in case of shared custody matters.
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The impact of changes on your stimulus check
According to the new rule, only a few people will qualify for the stimulus payment, making the stimulus payment targeted. If your household income is low, then you can qualify to receive the stimulus check. For instance, if your household expenses are $150,000, you will not qualify to receive the stimulus payment either you have one dependent or many dependents. Your qualification depends on the household expenses on the date when you will file the tax return.
The bad news of the new stimulus bill
If you have received the third stimulus check, you are lucky. Because for those who have not received the third stimulus check yet. The new stimulus bill does not protect you, unlike the second stimulus check. You may doubt that the debt collectors will garnish your third check for due payment of child support.
Payment of your child support through a third stimulus check
The federal agency can seize your first stimulus check to pay the overdue amount of your child support as per the CARES Act passed in March 2020. But the second stimulus check did not have the same rule. It means that if you own your child support, the state or federal agency will not seize your second stimulus payment against the overdue amount of your child support. Similarly, just like the second stimulus check, the third stimulus check has the same property. The federal agency will not adjust your due amount of child support with the third check payment. So here you can get your answer against the question, “If I owe child support, will I get the third stimulus check?”
As per the bill’s text, your payments are not likely to offset or deduction for past-due state or federal debts. But if you have some missing amount of your third stimulus check and want to claim in your next tax return, your amount of the third stimulus check may garnish. We suggest you file your tax return for 2020 soon. The families having kids will get advantages from the third stimulus check. You can increase the amount of $3600 per child according to the Child Tax Credit. You can benefit from some other tax breaks, which also include child care.
Taxes on your stimulus payment
Your stimulus payment is not income from the IRS’s point of view. It means that you will not have to pay tax on your stimulus payment. Similarly, your direct payment will not decrease your tax refund in 2021 and it will not increase your debts while filing your tax return in 2020. If you qualify in 2021 for the lower amount, you will not have to repay your stimulus check part.
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In short, the third stimulus check provides you many benefits since it is not subject to deduction for debts. But you need to know the criteria for eligibility. The IRS has two online portals for your help and guidance. You check your eligibility by signing up on the IRS account.
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