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COVID-19 Stimulus Checks: Your Questions Answered

8-minute read

Read more on COVID-19 in our Resource Guide.

Among the various coronavirus news reports, one of the most prominent topics this week has been focused around the economic stimulus package and, more narrowly, the stimulus check that is part of the package. While many are eager to know more about the stimulus check, it’s important to know about the stimulus package it’s part of and the reason the government is coordinating this effort in the first place. We’ve got answers to your questions below.

What Is A Stimulus Package?

A stimulus package is a variety of economic measures created by the government to aid a struggling national economy. True to its name, its purpose is to stimulate the economy by increasing government spending, thus preventing, slowing or reversing a recession or depression.

The 2020 economic stimulus package is a response to the impact COVID-19 has had on the national and global economy. It goes by a few different names, including the economic relief package, the coronavirus stimulus bill and the economic stabilization package, but its official name is the Coronavirus Aid, Relief and Economic Security (CARES) Act.

At nearly $2 trillion, the CARES Act is the largest rescue package in our country’s modern history.

What Does The 2020 Stimulus Package Include?

You can read the full CARES Act bill online, but here are a few key features of the stimulus package:

 

  • More than $350 billion in funding to help small businesses
  • More than $100 billion in funding for hospitals
  • $500 billion in government lending for distressed businesses
  • Protection against foreclosure and eviction
  • Extended and additional unemployment benefits
  • More people able to qualify for unemployment, including self-employed people like contractors, freelancers and gig workers
  • Eligible people directly affected by COVID-19 to withdraw from 401(k) savings without penalty
  • Direct payments to individual Americans through a stimulus check

 

While there is much to digest from the mammoth, 800-plus-page bill, this article will focus on one particular section that has piqued the interest of most Americans: the stimulus check.

What Is A Stimulus Check?

A part of the broader stimulus package, the stimulus check is a payment made to eligible Americans from the U.S. government. Not only can the money help provide some financial relief for many who are facing hardship, but it can also help boost the economy when the money is spent.

How Much Money Will I Get?

Individuals will receive up to $1,200, while married couples will receive up to $2,400. Parents will receive an additional $500 per child listed as a dependent on their most recent tax return.

Notice that when we list how much money you can get, we say “up to.” That’s because the payments are based on your Adjusted Gross Income (AGI) on your most recent taxes and scale down when it’s over a certain amount.

Here’s how it works:

 

  • Individuals who earned $75,000 or less on their most recent taxes will receive the full $1,200.
  • Heads of household who earned $112,500 or less on their most recent taxes will receive the full $1,200.
  • Married couples who earned $150,000 or less on their most recent taxes will receive the full $2,400.
  • For every $100 earned over those limits, the check amount decreases by $5.
  • Individuals who made over $99,000, heads of households who made over $136,500 and married couples who made over $198,000 will not receive a stimulus check.
  • Individuals, heads of household and married couples can earn up to $500 per child under 17 and claimed as a dependent on their most recent taxes.

The amount for that check decreases by $5 per $100 earned over the limits listed above. The $100 is taken from the combined total of all children, not each individual child.

Did you get all that? Here are a few examples of how much individuals and couples will receive based on their incomes and whether or not they have children:

 

Individual under $75,000: Alex earned $60,000 in 2019. Alex will get a stimulus check for $1,200.

 

Individual under $75,000 with children: Now let’s say Alex has two children under the age of 17, whom he claimed as dependents on his 2019 taxes. In addition to the $1,200, he will receive $500 for each child. In this scenario, Alex will receive a stimulus check for $2,200.

 

Individual over $75,000: Jane earned $90,000 in 2019. She will get a check in the amount of $450. Since she made $15,000 over the maximum, she will receive $750 less.

 

Individual over $99,000: Roger’s income in 2019 was $125,000. He has no children. He will not receive a stimulus check.

 

Individual from $99,000 to $108,999 with child: Erin’s income in 2019 was $100,000. She would not be eligible for a stimulus check, but she has one child. Since she made $1,000 over the maximum, the check for her child will be $50 less. She will get a check for $450. If she had two children, her check would be $950.

 

Individual at $109,000 or more, with child: Since the check amount decreases by $5 per $100 over, once an individual makes $109,000, they will not receive a check for one child. However, if they have two children, they would receive a check for $500.

 

Married couple under $150,000, with child: Jack and Amy earned $120,000 and claimed one child under 17 on their most recent taxes. Jack and Amy receive $2,400 plus $500 for their child. Their total check amount will be $2,900.

 

Married couple over $150,000: Mark and Sarah had a combined income of $160,000 on their recent taxes. They will get a stimulus check for $1,900. Since they made $10,000 over the maximum, they receive $500 less.

 

Married couple over $150,000, with child: Greg and Mary’s combined income on their 2019 taxes was $200,000, which makes them ineligible to receive the stimulus check. However, they have one child. They will receive a check for $400. Since they earned $2,000 over the maximum, they receive $100 less. So, if the couple had two children, they would receive a check for $900, instead of $1,000.

 

Married couple at $208,000 or more, with child: Since the check amount decreases by $5 per $100 over, once the couple makes $208,000, they will not receive any check for one child. However, if they have two children, they would receive a check for $500.

You can determine your check amount by using this stimulus check calculator.

Remember, the amount of money you receive is based on your adjusted gross income (AGI), which is your total taxable income. If you don’t know what that is, you can find it on line 8b on Form 1040 of your 2019 or line 7 on Form 1040 of your 2018 return.

Where Will The IRS Get My Information?

The IRS will use your 2019 taxes to get information on your adjustable gross income, your dependents, filing status (single or married). If you authorized direct deposit for electronic payments on taxes, the IRS will use that information as well. We’ll touch on that more when we talk about how you’ll get your stimulus check.

If you have not prepared your 2019 taxes yet due to the COVID-19 tax extension, the government will use your 2018 taxes. If you have not filed your 2019 or 2018 taxes, the IRS will use information from a 2019 Social Security Benefit Statement (Form SSA-1099) or a 2019 Social Security Benefit Statement (Form RRB-1099). If you didn’t receive those types of benefits and therefore don’t have these forms either, you may not get a stimulus check.

Do I Qualify For The Stimulus Check?

Many Americans are eligible for the stimulus check, including unemployed people, veterans, retirees and people on disability receiving social security.

You must have a Social Security number or adoption taxpayer identification number (ATIN). This is true for adults and children. According to The Institute On Taxation And Economic Policy, if you’re an immigrant who filed taxes using an Individual Taxpayer Identification Number (ITIN), you will not qualify for a stimulus check.

You will not qualify for a stimulus check if you filed any of these forms in 2019: 1040-NR, 1040-NR-EZ, 1040-PR or 1040-SS.

As stated before, if you made more than $99,000 as an individual or $198,000 as a married couple and do not have children, you will not receive a stimulus check. You may also not receive a stimulus check if you did not file your 2018 or 2019 taxes and do not have a 2019 Form SSA-1099 or Form RRB-1099.

Do I Need To Apply To Receive Money?

No. You do not need to apply to receive a stimulus check. However, as stated before, if you do not have 2018 or 2019 taxes filed and do not have a 2019 Form SSA-1099 or Form RRB-1099, you should file your taxes immediately to ensure you get a check. Those who do not normally file taxes due to low income and, in addition, do not receive Social Security benefits may still be required to file a tax return for 2019 to get their stimulus checks. You’ll need to verify with the IRS whether you’re required to file a tax return to get your stimulus check. If you do need to file, you can do so for free through the Free File program offered by the IRS.

How Will I Receive The Money?

If you authorized a direct deposit on your 2018 or 2019 taxes, you’ll receive your money via direct deposit. If not, a physical check will be mailed to the address the IRS has on file. Within 15 days of sending payments, the IRS will send a paper notice by mail with information on how and where the payment was sent. Wait until you receive that notice to worry about your check as it may take some time for the IRS to send out all payments. However, if you do not receive your check by the time you receive the notice, follow the letter’s instructions for reporting your missing check.

You can check to see how you'll receive your payment and input your direct deposit information if the IRS doesn't already have it on the Get My Payment site by the IRS.

When Will I Receive The Money?

Treasury Secretary Steven Mnuchin has expressed that he would like the payments to go out within 3 weeks of President Trump signing the CARES Act into law. However, a 3-week turnaround may be a little optimistic as stimulus payments in the past took a few months to arrive.

The IRS plans to begin issuing up to 70 million stimulus checks via direct deposit starting Thursday, April 9, with those payments showing up in bank accounts by April 15. Those receiving a paper check by mail will have to wait longer, months even. Paper checks are scheduled to start going out at the end of April at a rate of about 5 million checks per week. At that rate, it is estimated that some checks will not arrive in homes until end of August or early September. Those with lower incomes will be mailed their checks first.

For those who are able to be paid through direct deposit, the checks may come sooner than those getting a physical check in the mail.

The stimulus checks will be available through 2020, so if you still need to file your tax return or provide more information, you have time. However, the sooner you provide your information, the sooner you may get a check.

How Will I Know It’s Not A Stimulus Check Scam?

Unfortunately, it’s during times of uncertainty that scammers really try to cash in. One of the best ways to avoid being scammed is to remember that the IRS will not call, text or email you. The IRS will not reach out to you on social media. If someone is asking for your bank account information or any other personal information, do not give it to them. The IRS will not ask for that information, unless you have contacted them to give them your direct deposit information. Nor will the irs ask for any money from you. The IRS will not send you an email with links or attachments. Do not click on those links or open any attachments claiming to have information on your stimulus check. If you aren’t sure if a letter you receive is from the government, visit IRS.gov.

How Should I Use My Stimulus Check?

How you use your stimulus check is entirely up to you based on your financial situation and current needs. Here are some ideas for how to use your check:

 

  • Use the money to live off, pay your mortgage or meet any financial needs.
  • Put the money into your emergency fund for future needs.
  • Use the money to pay off some of your high-interest debt, which can free up more money each month.
  • Save for your future and put the money into your 401(k).
  • Invest in stock, while the market is down.
  • Donate your money to a loved one in need or a nonprofit helping those affected by COVID-19.

 

While we’ve compiled a list of some of the ways you can use your stimulus check, consider your own financial situation and see how it can best be used. If you are out of work, have reduced hours or are already living paycheck-to-paycheck, it may be in your best interest to use the money to pay bills or other monthly expenses to help maintain your financial health. If you are still working full-time, living comfortably and have a healthy emergency fund, you may consider donating the money or using it in other areas of your finances. We recommend speaking to a financial advisor to help you figure out the best way to spend the money.

Can Money Be Taken From My Check?

The stimulus checks are not taxable, meaning you’ll get the full amount. If you owe past taxes or have defaulted on your student loans, your check will not be reduced. However, if you owe past child support and it has been reported to the government, you could have that money taken from your stimulus check.

Private debt collectors may also be able to take money from your stimulus check. It is best to check with your state laws to see if this is possible, as some states have made emergency regulations to prevent this. If you are worried about having this money taken from your stimulus check, the National Consumer Law Center advises to "monitor their accounts and consider moving all money out shortly after it arrives."

Do I Have To Pay Back The Stimulus Check?

The stimulus check is an advance on your future 2020 tax return – the one you’ll file in 2021. It is a refundable tax credit, which you normally use when filing your taxes to reduce what you owe. The only thing that’s different is that you’re getting the tax credit now instead of when you do your taxes in 2021.

In short, it means it will not be taxed and you do not have to pay back the money from your stimulus check. It also means the stimulus check won’t reduce your future tax refund, and if your 2020 tax refund is less than the stimulus check amount, you won’t have to pay the difference.

Will There Be A Second Stimulus Check?

As of right now, the CARES Act calls for only one stimulus check for 2020. However, this situation is fluid and more may need to be done in the future. We don’t know. If there is a need for another round of stimulus checks, another bill would need to be written and approved.

Where Can I Get Stimulus Check Information From The IRS?

For the most up-to-date information straight from the source, visit IRS.gov/coronavirus.

The Bottom Line

Many Americans can expect some kind of stimulus check in the coming weeks or months. How much you receive will depend on your adjusted gross income from your most recent taxes, your filing status (single, married or head of household) and the number of children you have. While this may offer some reprieve for those who have lost their jobs, had wages cut, live on low-income or live paycheck to paycheck, there is still uncertainty in what lies ahead. As we continue to live through the COVID-19 situation, much of the impact from the virus is experienced as it happens. We’ll keep you updated on changes to the economy, housing market and the daily lives of Americans as they happen. You can find more information in our COVID-19 Resource Guide. As we get through this together, remember to stay updated, stay calm and stay safe.

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