Will I Get a Stimulus Check If I Owe Taxes?

Posted by in Taxes | Updated on August 26, 2022

Typically, if you have any federal or state debts, the IRS will take any refund amounts you receive and use them to offset those post-due debts. The IRS can automatically take your refund amounts to pay off outstanding student loans, state taxes, or child support payments.

This might lead you to ask: Will I get a stimulus check if I owe taxes? Or will the IRS use it to pay off my debts? The good news is, yes, you will receive your stimulus check even if you owe taxes. The only exception is past-due child support payments.

What is a Stimulus Check?

A stimulus check is a check sent to a taxpayer by the U.S. government. Stimulus checks are intended to stimulate the economy by providing consumers with some spending money. When you spend this money, it boosts consumption and drives revenues at retailers and manufacturers and thus boosts the economy.

The stimulus payment is actually a refundable tax credit. This means the government gives you money, even if you didn’t pay anything in taxes. Normally, you get money from tax credits when you file your tax return in April. Because of the COVID-19 emergency, the government wants you to be able to use the money now when you need it, instead of waiting until next April to receive it.

Traditional tax credits are a way of decreasing the amount of tax you pay the government. For most tax credits, you will not get a check. The IRS just makes a note that you have paid too much tax. This extra money can then be paid out to you in cash, or be used by the IRS to pay outstanding debts.

Research done by the National Bureau of Economic Research found that the means of delivery of fiscal stimulus makes a difference to the overall spending patterns of consumers. Receiving a stimulus check increased consumer spending. Not only did this give a lifeline to those in need, but it also boosted the economy.

Applying tax credits equal to the amount of money provided in a stimulus check did not have the same effect. People couldn’t spend the money on the things they needed, some of it went to the payment of any outstanding debt, and less consumer spending meant a smaller boost to the economy.  

The IRS is using your previous tax returns to see whether you qualify for a stimulus check. But don’t worry, the IRS is not going to ask for the money back once you file your 2020 taxes.

Will I Get a Stimulus Check if I Owe Taxes?

Typically, if you have any federal or state debts, the IRS will take any refund amounts you receive and use them to offset those post-due debts. The IRS can automatically take your refund amounts to pay off outstanding student loans, state taxes, or child support payments.

But it doesn’t quite work this way with a stimulus check. Because stimulus money is designed to boost the economy and give a lifeline to those in need, you will receive a stimulus check even if you have outstanding debts. The IRS is not going to use your stimulus check to offset what you owe the government. You won’t be denied a stimulus check just because you’re behind on your tax bills.

If you choose to, you can always use your stimulus check to pay down tax debts. That makes sense if your basic needs are already taken care of.

Exceptions to the Stimulus Tax Rule

The general rule is the IRS is not going to use your stimulus check to offset what you owe the government. You won’t be denied a stimulus check just because you’re behind on your tax bills.

However, the one exception is past-due child support payments. If you owe past-due child support, you’ll get a notice from the Bureau of Fiscal Service to let you know that a portion (or possibly all) of your stimulus check will go toward paying off your child support debt.

Stimulus Checks Are Tax-Free

Stimulus checks are a tax-free boost from the government. This means you will not have to pay any tax on a stimulus check if you receive one. You don’t even have to report it on your tax return as income!

Your stimulus check is not considered taxable income. This payment won’t reduce your refund or increase the amount that you owe when you file your 2020 tax return. The stimulus payment is actually a refundable tax credit. This means the government gives you money, even if you didn’t pay anything in taxes.

How the Recovery Rebate Might Affect You

If you didn’t receive all of the stimulus money you were entitled to receive in 2020, you may be eligible to claim the Recovery Rebate Credit when you file your tax returns. This gives you access to the stimulus money you missed out on last year.

However, the Recovery Rebate Credit is not a check, but a more traditional tax credit. It is a way of decreasing the amount of tax that you pay the government, which means that, in effect, you have more disposable income. If you claim the Recovery Rebate Credit, you will not get a check. The IRS just makes a note that you have paid too much tax. This refund can be used by the IRS to pay outstanding debts.

So if you are receiving a stimulus check, you can receive the full amount even if you owe taxes. But if you are applying for the Recovery Rebate Credit, this rebate will be used to pay off your tax debts. So if you have tax debts you might not see the cash.

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Final Thoughts

Will I get a stimulus check if I owe taxes? Or will the IRS use it to pay off my debts?

The good news is, yes, you will receive your stimulus check even if you owe taxes. Normally, you get money from any tax credits when you file your tax return in April. Because of the COVID-19 emergency, the government wants you to be able to use the money now when you need it, instead of waiting until next April to receive it. Because your stimulus check doesn’t work as a normal tax credit, the IRS is not going to use your stimulus check to offset what you owe the government. You won’t be denied a stimulus check just because you’re behind on your tax bills.

The only exception is past-due child support payments. These payments will be subtracted from your stimulus check.


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