Answers to Stimulus Check Questions

Apr 2020


              Over the last couple of weeks, I’ve received a number of questions regarding the government’s stimulus check, which the IRS has just started depositing in peoples’ accounts.  I thought I would answer some of those questions here.

            There were a number of questions regarding how the IRS determines how much your stimulus check would be and how it is handled for tax purposes.  The first thing to know is that the stimulus check is not considered taxable income to you. Therefore, when you file your 2020 tax return, you do not have to report the amount you received in your stimulus check. Second, the IRS determines the amount of your stimulus check based upon your 2019 tax return, or if you have not filed your 2019 tax return, your 2018 tax return. Because the way the law is written, the stimulus check you receive is actually structured as a credit towards your 2020 taxes.  Therefore, it is possible that when you file your 2020 tax return in 2021 you potentially receive an additional stimulus amount. This would happen if it turns out your 2020 income was lower than the tax year the IRS used to determine your stimulus check.  For example, if the IRS used your 2018 tax return to determine your stimulus check amount, and in that year your adjusted gross income was $85,000, your stimulus check would be $700. However, if it turns out that your adjusted gross income in 2020 was $75,000, you would be entitled to the maximum amount of $1,200. Since you only received $700 initially, the IRS would send you an additional $500. On the other hand, if the numbers were reversed and your income in the year the IRS used was $75,000 and thus, you received the full stimulus check of $1,200, and it turns out your 2020 income was $85,000, you would not have to pay back the $500, even though you were only entitled to $700.

            I also received a few questions regarding whether stimulus checks are protected from debt collectors or creditors. The simple answer is no, there is no special protection in the law that would prevent creditors from seizing this money. In fact, the law specifically mentions that if individuals are past due on their child support, the Treasury Department is legally allowed to seize a stimulus payment to cover child support. Under the law there are no exceptions to this provision even for financial hardship. In addition, if your stimulus payment is directly deposited to a bank where you owe money, the bank can seize all or part of your stimulus check to payback the back debt.  The law also does not provide any provisions from private debt collectors potentially garnishing your account. Of course, in order to garnish an account the creditor must have an outstanding judgement against you.

            If you’re worried about creditors seizing your stimulus money or you have not yet received your payment, you can request the IRS to send you a paper check and then you can cash that check as opposed to depositing it.  To request a paper check you need to go and click on “Get My Payment”. On the other hand, if you’ve already received the amount, you can immediately withdraw it before creditors can seize it.

             Some readers mentioned they received a postcard with a password and were told to use that to access their payment online. Thankfully, these readers were questioning whether it was legitimate or not.  As I told these people, without question, it’s a scam and they need to ignore the card.  The IRS will not contact you for your bank account information or to request other personal information. Scam artists are out in force and we all must be extra aware. If you receive an email claiming that in order to get your stimulus check you need to click on a link, my advice is, the only thing you should click on is the delete button.

            Just a reminder how important it is that we continue to protect ourselves by staying home, and if you have to go out, keep your social distance.  These are extraordinary times and we do have to take extraordinary measures to protect ourselves.

            Good luck!



         Rick is a fee-only financial advisor.  If you would like Rick to respond to your questions, please email Rick at