We owe the Govt money this year. Will they automatically take it out of the stimulus checks they are sending?

Question

Our accountant said for us to expect 1500.00 from the economic stimulus package checks and we owe almost 700.00. Will the Govt automatically take that out of the 1500.00 if they haven't received it yet?

Answer 1

Yes. According to the IRS:

Q. I'm eligible for a payment but I still owe federal income tax from a prior year. Will my payment be reduced?

A. Yes. For this purpose, the stimulus payment is treated like any other tax refund. This means that part or all of your payment can be used to pay past-due federal or state income taxes or non-tax federal debt such as student loans and child support. If this occurs, you will receive a letter explaining how the stimulus payment was applied.

Answer 2

I owed $ 340 in federal taxes and today (6/9) the payment calculator is working for me saying my refund will be $260.So yes they do take the money you owe from the rebate check.

Answer 3

The balance depends if its an autocollect account. In most cases the goverment allows individuals to setup payment arrangements however if the balance due has already gone into a collections mode like say back taxes owed or child support they will directly attach the funds and it will also mean delayed processing since most likely your SSN is flagged.

Answer 4

Yes, it's automatic. The processed tax return will show a balance. If your scheduled time for the rebate has passed, then about a week later the rebate will generate, pay the balance due, and send you the difference. If your scheduled time is in the future, then the offset will take place at that time, meaning that you will be subject to any penalties and interest that accrue.