Stimulus checks are on the minds of many as many Americans struggle to weather the economic fallout from the Coronavirus pandemic. Below are answers to several frequently asked questions as it relates to the stimulus checks currently being issued.
Who doesn’t get a stimulus check?
Anyone who can be claimed as a dependent by someone else. For example, elderly parents living with children will not be eligible and there will be no payments to children living at home who are 17 or 18 years old, or to college students who are 23 or younger at the end of the year who don’t pay at least half of their own expenses. Those without a social security number will also be out of luck.
How many stimulus checks will I get?
For now, just one. The law, signed by Trump March 27, authorizes only one payment. Payments are part of the $2.2 trillion rescue package known as the CARES ACT (Coronavirus Aid, Relief, and Economic Security Act) signed into law by President Donald Trump aimed at tempering the economic damage of the coronavirus pandemic and helping those suffering financially.
How much will my stimulus check be?
The base amount is $1200 but that number will change based on how you file your tax return, how many children you have and how much your adjusted gross income was on your 2019 tax return. If you’re married and file a joint tax return, you and your spouse will get $1,200 each (for a total of $2,400). If you have children who qualify for the child tax credit (they must be 16 or under), you get an additional $500 for each child.
However, stimulus payment amounts will be phased-out for people at certain income levels. This applies if you’re single, married filing a separate tax return, or a qualifying widow(er) with an adjusted gross income (AGI) above $75,000 or if you’re married and file a joint tax return, the amount of your stimulus check will decrease if your AGI exceeds $150,000. If you claim the head-of-household filing status on your tax return, your payment will be lowered if your AGI tops $112,500. Those earning more than $99,000, or $198,000 for joint filers, are not eligible. The thresholds are slightly different for those who file as a head of household.
You can determine how much your check will be by inputting your information into this Stimulus check calculator: https://www.kiplinger.com/tool/taxes/T023-S001-stimulus-check-calculator-2020/index.php
When will I get my stimulus check and how?
Many received checks via direct deposit already, and others are still waiting for theirs to arrive. The government is also prioritizing the first few waves of payments toward low-income Americans and Social Security beneficiaries. The truth of the matter is there is no surefire way of knowing the exact date they will arrive, and it is different depending on who you talk to. At this point, it has become clear that any time frame provided was purely an estimation. IRS and Treasury developed an online portal for individuals who are not already set up with direct deposit, to provide their banking information so that they too can receive the payments faster. Some took advantage of this tool and others did not. Specific information is available at the IRS website.
What if I didn’t file a 2018 or 2019 tax return?
Some people didn’t file a tax return for 2018 or 2019 because their income didn’t reach the filing requirement threshold. This group of people has grown thanks to the standard deduction almost doubling in the 2018 tax year. According to the IRS, if you are one of these non-filers, you will need to file a simple tax return to receive a stimulus check. Although low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities will not owe tax. The IRS will pull information from a 2019 Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement, to calculate your stimulus check amount instead. Keep in mind, these stimulus checks being distributed now are just advanced payments of a new 2020 tax credit. So, if you don’t get a stimulus payment in 2020, you can claim it next year as a refund or reduction of the tax you owe if you file a 2020 tax return by April 15, 2021.
Will there be a second round of stimulus checks?
The buzz on the street right now is that there is a good chance another round of relief is coming. The HEROES Act was passed by the House of Representatives on May 15, 2020, but it will have to get through the Republican-controlled Senate first. This legislation includes a second round of stimulus payments of up to $1,200 per person and $1,200 per dependent (up to three). The income eligibility thresholds would be the same as the first stimulus. It appears the Senate Republicans would prefer to proceed slowly on additional stimulus measures. Some fear providing more stimulus will not help get people back to work. However, those concerns seem to be drowned out by those seeking relief who can’t pay their bills, and the lawmakers on Capital Hill who don’t think the first stimulus check is enough to pull the U.S. economy out of a recession. Representative Ro Khanna and Representative Tim Ryan proposed a bill called the Emergency Money for the People Act that would give every qualifying American over the age of 16 a stimulus payment of up to $2,000 each month for up to a year (plus $500 for up to three children). We will have to wait and see if any of these bills come to fruition.
The hope is that Americans will use whatever stimulus checks they receive to pay bills and buy goods and services to help lift the economy up to a better state. Only time will tell if these efforts pay off.
Sources: Kiplinger/ Yahoo Finance/ U.S.News/ CNBC
© Geier Asset Management, Inc. May 2020. Gregory Palacorolla, CFP ® is Director of Wealth Management for Geier Asset Management, Inc., a Registered Investment Advisor. The articles & opinions expressed in this material were gathered from a variety of sources, but are reviewed by Geier Asset Management, Inc. prior to its dissemination. All sources are believed to be reliable but do not constitute specific investment advice. The views expressed are those of the firm as of May 2020 and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of results, or investment advice. Any advice given is general in nature and investors must consider their own individual circumstances. In all cases, please contact your investment professional before making any investment choices. Geier Asset Management, Inc. is not responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.