One of the key features of The Coronavirus Aid, Recovery, and Economic Security (CARES) Act, the most significant relief package in history, are direct payments to a majority of U.S. taxpayers and their families. Here’s what you need to know about how much your “economic impact payment,” will be and how and when you might receive it.
Who qualifies to receive a stimulus check?
About 94% of U.S. taxpayers are eligible to receive a stimulus check from the federal government under the CARES Act. Here are the minimum eligibility requirements:
- Be a U.S. citizen or legal resident
- Have a work-eligible Social Security number (including those who are currently receiving Social Security benefits and on disability)
- Not be a dependent or eligible to be a dependent of any other taxpayer
How much will my stimulus check be?
Checks to eligible individuals will be $1,200 or less, depending on your adjusted gross income (AGI), as reported on your tax return for either 2018 or 2019. Couples filing joint returns will be eligible to receive $1,200 each, for a total of $2,400. Families with children age 17 or younger will receive $500 for each child.
- If you are a single filer with AGI of $75,000 or less, you will receive $1,200.
- If you are married filing jointly with AGI of $150,000 or less, you will both receive $1,200.
- If you are single and head of household with AGI of $112,500 or less, you will receive $1,200.
- The amount of your check will decrease by $5 for every $100 by which your AGI exceeds the threshold for your tax filing status.
To determine the amount you may qualify for based on your filing status and income, you can utilize this calculator from the Washington Post.
If you think your stimulus payment would be larger based on your filing status in 2018, you may wish to delay filing your 2019 return until after you’ve received your check. Remember, for 2020; you do not have to file your return until July 15.
What do I have to do to receive my stimulus check?
As long as you filed a tax return in 2018 or 2019, you probably don’t have to do anything. The IRS will make a payment to you via direct deposit or mail you a paper check if your banking information is not on file. Checks will be mailed to the address shown on your tax return. If you haven’t filed a tax return in either 2018 or 2019, you will need to file a simplified return in order to qualify to receive a payment. More detailed information on the simplified return filing process will be posted here.
In the coming weeks, the Treasury Department plans to develop e a web-based portal for individuals to provide their banking information to the IRS online, to allow you to receive your payment much quicker than waiting for a paper check in the mail.
What If I Don’t File a Tax Return? Will I still receive a check?
Yes. Senior citizens, Social Security recipients, and railroad retirees who are not typically required to file a tax return will not need to file to receive a payment. According to the IRS they will use the information on Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients.
Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time.
For other tax filing situations, more information can be found here.
When will my stimulus check arrive?
If you receive IRS tax refunds through direct deposit and filed a 2018 or 2019 tax return, according to the IRS, you should see your direct deposit in the next few weeks. If you are on Social Security or do not file taxes you will receive your stimulus check in the mail unless you log into the IRS web-based portal noted above, once available, to provide your banking information.
According to the IRS, checks will begin to be mailed the week of May 4th but could take up to 20 weeks or more for most checks to be distributed.
What should I do with my stimulus check money?
The intent of the Economic Impact Payments was to provide direct assistance to U.S. taxpayers who have lost wages, jobs, or opportunities because of COVID-19. However, everyone’s financial and economic circumstances are different and how you should use your stimulus check will depend on your personal financial situation and needs.
Depending on your personal financial needs you might prioritize the use of your stimulus check in this order:
- Paying for necessities (food, shelter, transportation, medicine)
- Making minimum payments on credit cards or other debt. Staying current will prevent having to dig out of a deeper hole when life returns to normal
- Paying off high-interest debt if possible. The less debt you carry, the more flexible you can be in good times and bad.
- If you can afford to do so, starting or add to your emergency fund. You should try to keep six months’ worth of expenses in your emergency fund.
- Saving for retirement. If you have extra money left over, consider opening or adding to an IRA or other retirement plan.
- Giving to others in need. If your employment has been less affected by the pandemic, and you are in a financial position to do so, you may wish to allocate some or all of your stimulus check to a friend, family member, or neighbor who needs extra assistance. You can also donate to nonprofits helping to respond to COVID-19 and your other favorite causes.
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