In most cases, entitlement to financial help from the US government stops when serving time in jail.
But what about stimulus checks? Are they different?
Can somebody else claim the stimulus money on behalf of the incarcerated individual?
We explore the subject of stimulus checks and the rights of prisoners and their family members and answer some other commonly asked questions.
What is a stimulus check?
Let’s take a look at what a stimulus check is first.
A stimulus check is a payment made by the US government to tax-paying citizens with their finances and attempts to boost spending in the economy during times of uncertainty such as the recent Covid-19 pandemic. The IRS issued the following three Economic Impact Payments during the Covid-19 pandemic for eligible people:
· $1,200 in April 2020.
· $600 in December 2020/January 2021.
· $1,400 in March 2021.
According to the U.S. Census Bureau’s poverty measure, the stimulus payments in 2020 moved 11.7 million out of poverty.
Stimulus checks were used to try and help the American economy recover during The Great Recession in 2008.
There are always deadlines for requesting a stimulus check if you haven’t received it automatically. People in prison sometimes are given an extension to the deadline or able to file for the payment during the following tax year.
Who is eligible for a stimulus check?
The government will release the eligibility criteria for a stimulus check and make them publicly known.
Typical eligibility includes:
· Residency – you must be a permanent or qualifying US citizen.
· A valid taxpayer identification number – this number is required to process your stimulus check payment.
· Your income – income thresholds are set so that people who earn over a set amount of money won’t be eligible. Whether you’re filing your earnings and tax returns separately or as a married couple will also affect eligibility.
· Dependency status – this means that you can’t claim as a dependant on another person’s federal tax return and file a separate claim.
Who isn’t eligible for a stimulus check?
There are some reasons why you might not be eligible to receive a stimulus check, including:
· If your income is too low or too high and doesn’t meet the stated criteria. The IRS sends stimulus checks via the Treasury, so it’s worth finding out what the minimum criteria is from your local government department.
· If your tax return hasn’t been processed yet. Stimulus checks are often based on the amount of tax you pay, so if your return hasn’t been filed and returned yet, this could be holding up your payment.
· You’ve been a victim of a scam. Cybercriminals pose as government agencies to contact you about your upcoming stimulus payments. In doing so, they steal your personal details and claim the stimulus check for themselves.
Sometimes, stimulus payments are split into different rounds like in the Covid-19 pandemic. It’s worth noting that just because someone was eligible for one payment, doesn’t mean that they will qualify for the remaining rounds of stimulus checks.
How will the IRS know where to send my payment?
Most people won’t need to take any action in order to receive their payment, including individuals that are currently serving jail time.
The IRS will use the address on the most recently filed tax return to issue the check.
Can you cash a stimulus check for someone in jail?
Yes, in most cases but other eligibility criteria must be met, as described above. There are also some state laws that apply to a person who is in jail. Check with your local government to find out what they are.
How to cash a stimulus check for someone in jail
Here are the ways that you can cash a stimulus check for an imprisoned individual.
At a bank branch
The simplest way to cash stimulus checks for incarcerated individuals is by having possession of the check and making a trip to the bank. To do this, you will need the person’s bank account number. Writing the name, account number and “For Deposit Only” on the reverse side of the check will restrict it so that the funds can only go into the payee’s bank account. Then, simply fill out a generic deposit slip with the date of the deposit, name on the account and account number.
Using the payee’s debit card
You should seek permission from the account holder’s bank or card issuer before attempting to use an incarcerated person’s debit or credit card. If you have this, along with the individual’s debit card, PIN number and stimulus check, you can write “For Deposit Only” on the back of the check and deposit it at an ATM.
Becoming a Power of Attorney
If you regularly deal with an inmate’s financial matters, it makes sense to obtain POA from the incarcerated individual.
A POA is a legal document that gives a person (called the donor) the power to make important financial decisions on their behalf to another person (called the attorney). A POA manages someone else’s money if they become unable to do so themselves, for example, if they are in prison.
You can arrange for a legal POA document to be written by a legal professional, which can then be taken to prison for the individual to sign.
Once the POA is set up, you won’t need any authorization from the individual in jail to deposit checks, including stimulus checks.
Is it possible to cash a stimulus check online?
Mobile payment solutions such as Venmo allow you to cash in stimulus checks directly from their app. Some mobile payment apps charge fees, so always check with the provider before cashing in a stimulus check.
What if an incarcerated person doesn’t have a bank account?
If somebody you know is in jail and doesn’t have a bank account, it’s possible for the payee to sign a check over to a trusted person.
To do this, the check would need to be signed by the person in jail along with a written statement that says “pay to the order of (person’s name they are handing the check to).”
This method is known as a third-party check as the funds go through a payee to a third party. However, this only applies to normal checks that are not issued by the government. This means that stimulus checks can only be deposited in the payee’s bank account either in person or using a debit card at an ATM.
What happens to a person’s finances when they go to jail?
Financial obligations won’t just disappear while someone serves time in jail.
So, what happens to bills and bank accounts when a person is incarcerated?
It’s unlikely that somebody behind bars will have the same access to their money as before.
Here are some possible scenarios of what could happen to the money:
Remains in a current account – in most cases, an individual’s money will sit in a bank account throughout their time in jail.
Frozen by law – if somebody has committed a crime where they benefitted financially, the government could freeze money and assets belonging to the criminal. This normally happens in drug crimes.
Frozen by the bank – some banks may freeze accounts that haven’t been used in a while as a safety precaution. Until the incarcerated person contacts the bank, access to money will be withheld.
How about a committed criminal’s house?
Well, this will depend on whether the person owns or rents their home.
Homeowners – even though a prison sentence typically means that money is no longer being earned, the mortgage will still need to be paid. There are options such as leasing the house whilst the owner is in jail or negotiating a temporarily lower rate of repayment with the mortgage company.
Renting – whilst a person is incarcerated, the financially smart thing to do with a rented property is to end the lease so you don’t have to continue to pay rent whilst in jail. This is the preferred option for people serving longer prison sentences, however if the individual is only going to be behind bars for a month or two, the early termination fee might not make it financially worthwhile to end the contract early.
If you or somebody you know is due to go to jail soon, it’s important to deal with your debts as soon as possible.
The first step is to inform the creditors you owe money. Without doing this, they can still take action to collect any money owed whilst you’re in prison which can affect family members. For example, if the prisoner owes money on a gas or electricity bill, the provider could disconnect the supply even if other family members are living in the house.
The best way to deal with unpaid debts while in prison is to appoint a trusted individual to deal with the finances of your account while you’re unable to access them. You can also ask whether a payment break is possible until you’re released.
Child tax credit
Unless a child is living with you in prison, you will no longer be responsible for them if you are in prison. This means that you won’t be able to claim Child Tax Credit. The person who is now responsible for caring for your child will need to make their own child tax credit claim to receive the money if they are eligible.
Can a prisoner earn money while serving time?
Yes, although wages that inmates can earn are very low and don’t match the rate of equivalent work outside of jail. Inmate work ranges from prison kitchen duties to maintenance tasks.
The money that they earn is used to pay for things like phone calls home. The rest of the money is put into the prisoner’s bank account, which can’t be accessed until they are released. Sometimes, money earnt is sent home to help family members with their finances.
Most prisons run educational programs to help inmates learn new skills that they can use when they are released. Some courses are funded by the prisons themselves, but others may require prisoners or their families to pay for some courses. Education in prison is considered one of the most effective ways to prevent rehabilitation and improve an inmate’s well-being and mental health. Increased morale, self-worth, and self-esteem are other proven benefits.
Do prisoners in the US pay taxes?
Everyone is responsible for paying federal income tax (on all taxable income), including prisoners. The inmate’s marital status will affect how much percentage needs to be paid so check the latest tax thresholds in your state. Typically, people in jail that only have a small income from a prison job will pay around 15% tax.
If prisoners are eligible for a tax refund while they are incarcerated, they will have three years after the date of the last tax return to claim the money back.
Can you deposit someone else’s stimulus check?
Banks will not accept a deposit to an account that is in someone else’s name. If this happens, the bank will return the stimulus check for the IRS to re-send the check to the address stated on the person’s last tax return. This process can often delay the cash for the stimulus check from reaching the original person’s account for several weeks.
Tracking stimulus check payments
The IRS has an online system that can be used to check the status of stimulus payments during a certain timeframe. However, people in jail will need access to an internet connection, and their login details in order to sign in.
If you haven’t received your third stimulus check and believe you’re eligible for the money, contact IRS immediately to discuss.
How to make the most of your stimulus check
Once your stimulus check has cleared, you may want to start thinking about the best way to spend the money. The Covid-19 pandemic will affect households and the US economy for quite some time, so put your money to good use.
Here are a few ideas to consider.
1. Pay your bills – clearing debt or paying utility bills should be a priority for most households, especially if you or a family member are currently incarcerated and not earning regular money.
2. Create an emergency fund – a great way to put the money from your stimulus check to good use is to start or add it to an existing emergency fund. Aim to have enough in your pot to cover three to six months of living expenses to cover anything unexpected such as house repairs or loss of earnings.
3. Save for retirement – if you don’t need the cash from your stimulus checks for paying bills, a smart financial move is to use the money to put it towards your retirement fund. This is because it’s tax-free money and you won’t pay any tax on it if you put it in a pension fund.
4. Invest – if you don’t need access to the money immediately, invest the cash from your stimulus check in a high-yield savings account, certificate of deposit or stocks and shares.
5. Save for other money goals – this can be motivational for people who are currently in jail and need something to look forward to when they are released. Whether it’s saving for a down payment on a house or a new car, setting goals is a great way to meet financial objectives.
6. Invest in yourself – for people who have recently been in prison, using spare cash to improve their credentials through training programs is a smart way to start building a career for your future. Why not take an online training course and learn a skill that you’ve always been interested in?
7. Open a child’s savings account – it’s never too early to teach children good financial habits. Teaching a child about how saving works and banks is an important life lesson.
8. Pay your taxes – do you have any taxes that are due or overdue? Now is a good time to use your stimulus cash to pay them off and avoid any fees.
9. Donate to a worthy cause – if you can afford it, using some or all of your stimulus check to help those less fortunate is a rewarding way to use the money. Local charities and communities that deliver in your state are a good place to start.
10. Start a hobby – hobbies are an effective way to boost social interaction and physical and mental stimulation. Most hobbies will require a cash injection to learn or buy the equipment that you need.
Cashing stimulus checks for incarcerated individuals
To summarise, it is possible to cash a stimulus check for someone that is in jail providing you have the authority to do so.
If you, or somebody you know, is facing a jail sentence it’s important to try and get finances in order before you become unable to access information that you need.
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