Many Americans are receiving a 2nd stimulus check for $600 from the federal government and have questions about how the money can or should be used. Below are three key points to know about the latest stimulus payments.
- Banks and lenders can’t take this money from you (with one exception)
Unlike the first stimulus payment under the CARES Act, the 2nd stimulus payment is not available to banks and creditors to take when accounts are outstanding — including missed car payments. (If you are having difficulty paying your car loan, this article offers information about what you can do.) The one exception is that individual banks may use your stimulus — if made via direct deposit to your account — to cover overdraft fees. Most large US banks (e.g., Bank of America, Citigroup, JPMorgan Chase, Wells Fargo) are temporarily zeroing out customers’ negative balances so they can access the full $600. Smaller banks may use the funds to cover overdraft fees – so if you have any questions, contact your bank to see what their policy is. You can ask for a temporary overdraft waiver if they don’t already offer one.
- Your 2nd stimulus check is not taxable income
Stimulus payments aren’t considered income so the IRS won’t tax you on it, nor can they garnish it if you owe them money in back taxes or otherwise. If for some reason you didn’t receive your full stimulus check amount this year or last year, you can claim the full amount as a Recovery Rebate Credit on your 2020 federal income tax return.
- Landlords can’t require you to use your stimulus money to pay rent
Similar to the CARES Act from last year, landlords cannot demand that you pay your rent (or back rent) with your stimulus check. Additionally, President Biden just extended the eviction moratorium to March 31, 2021, so if your landlord does attempt an eviction, you can contact the Department of Housing and Urban Development. If you need assistance with making your rent payments, you can find a list of state-by-state relief programs here.
It’s important to be informed and know your rights when it comes to your stimulus payments. If you have other questions we didn’t address or that you can’t find answers to, feel free to contact us at [email protected].