On March 11, President Joe Biden signed a $1.9 trillion coronavirus aid package into law that includes enhanced unemployment, a newly expanded Child Tax Credit, and, of course, $1,400 stimulus checks. Some people who received a stimulus payment during the first two rounds will not be eligible this time around due to lower eligibility cutoffs. But the bulk of Americans who previously got a stimulus will still be entitled to their $1,400. In fact, today is the day when much of that money will be available in Americans' bank accounts.
No more waiting
The IRS was quick to distribute stimulus funds once the relief bill became official. In fact, payments started going out over the past weekend.
There was just one problem -- for many, that money was flagged as "pending," which meant it was in the works, but not yet accessible. This caused some confusion, but it actually makes sense. It can generally take banks a few days to clear funds once they come through, so that money could show up as pending in an account but not yet available for withdrawal. But a number of large banks have announced that beginning today, those stimulus funds should clear, which means recipients will be able to access that money and use it as they please.
Mailed stimulus payments will take longer
While a lot of people will gain access to their stimulus funds today, those who aren't eligible for direct deposit may need to sit tight a few more weeks. As was the case with the last two stimulus rounds, stimulus payments that go out by mail will take longer because the IRS can only issue so many at a time. Those waiting on a check or debit card may not see their money until some point in April, and that timeline could even extend into May.
Let's not forget that right now, the IRS is dealing with the confluence of stimulus payments and 2020 returns and refunds, and so in the coming weeks especially, the agency's limited resources may become taxed (no pun intended). That could lead to a delay in mailed stimulus funds, though that's by no means guaranteed to happen.
Some stimulus funds may be garnished
Another hiccup with this stimulus round is that unlike the last round, recipients aren't protected from having their payments garnished by private creditors. Those with judgments against them for unpaid debts may try to access their stimulus money, only to find that their banks have been directed to freeze their accounts and divert those funds elsewhere.
Some lawmakers, however, are already working to prevent that from happening. The logic is that many people who are eligible for stimulus checks are operating in crisis mode, and denying them that money could be downright catastrophic. While some recipients will no doubt use their stimulus funds to save or invest, others need that money just to get by.
Furthermore, while the new relief bill does extend boosted unemployment benefits, there may be a lag in getting that money out to recipients in some states. It's people in this situation who especially can't afford to have their stimulus funds garnished.
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March 17, 2021 at 09:32PM
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Stimulus Check Update: Many Payments Should Clear Today - Motley Fool
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