But when it comes to taxes and stimulus, there are so many questions. And 7 On Your Side is here to clear up the confusion.
The most common question we're getting is, "If I have not filed my 2020 taxes, will I still get my check?"
The answer is YES. We are in the middle of tax filing season, so don't worry. The IRS will use your last tax return to determine the amount you are eligible to receive.
If you made less this year during the pandemic and qualify for a bigger check, you will have the chance to adjust your income and get the rest of your money later this year after your file your 2020 return.
"You actually have two chances, this time around, to get your money back," Money.com senior writer Julia Glum said. "There will be the additional payment determination date. That's coming this summer, and then next year, on your taxes, you'll be able to claim recovery rebate credit."
You will need to file within 90 days of the tax deadline, which was just pushed back to to May 17.
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The next popular question is, "Can my stimulus check be garnished for unpaid debts?"
The answer to this is yes AND no.
The new checks cannot be garnished to pay back taxes, child support, or outstanding student loans. But unlike the last $600 check, this latest round is not protected from debt collectors to pay for past-due credit card debt or medical costs -- provided there's a judgment against you first.
"The debt collectors can take it, they can garnish it," Glum said. "Your bank can kind of take parts away from it to pay for fees if you have an overdrawn account or something like that. Private debt collectors are probably a little more likely to be aggressive about taking your stimulus payments."
New Jersey Governor Phil Murphy announced good news on Twitter Wednesday for state residents who might be the target of debt collectors.
NEW: We’ve secured support from 49 banks and credit unions to protect residents’ American Rescue Plan payments from being garnished.— Governor Phil Murphy (@GovMurphy) March 24, 2021
The American Rescue Plan is for the American people – not the banks and creditors.
"We've secured support from 49 banks and credit unions to protect residents' American Rescue Plan payments from being garnished," Murphy said. "The American Rescue Plan is for the American people - not the banks and creditors."
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People also want to know if their check is considered taxable income. The answer is no, you won't be taxed on your stimulus money. Also, a direct payment you get this year won't reduce your tax refund in 2021 or increase the amount you owe.
The exception is if you get any stimulus money and are filing for a Recovery Rebate Credit on your federal income tax returns. The IRS will take out whatever back taxes you owe first, then give you the leftovers.
A family of four could get up to $5,000 with the latest round of stimulus, the most generous helping of cash thus far, so what should you do with it? You can pay down your debt, saving on interest. You could shore up an emergency fund, or put the money in a tax advantaged 529 plan to help save for your kids college education.
Click here from more from Julia Glum on the latest batch of stimulus payments.
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