Your Stimulus Check Questions Answered
Will I Receive a Stimulus Check?
The CARES Act provides a stimulus check for citizens and resident aliens who meet certain criteria in response to the economic impact of COVID-19. If your adjusted gross income is less than $75,000 for single filers ($150,000 for joint filers), you are eligible to receive $1,200 for single filers ($2,400 for joint filers). If your adjusted gross income is higher than those amounts but less than $99,000 for single filers ($198,000 for joint filers), you may receive a portion of the total amounts previously listed. If you have children, you will receive an extra $500 for each child under the age of 17. The phaseout numbers listed above are based on your adjusted gross income for the year 2019 but if you haven’t filed yet, your benefit will be based on your 2018 return. Certainly, there are some planning opportunities here. For example, if your adjusted gross income is expected to be above the threshold in 2019 but you were below the threshold in 2018, it may make sense to delay filing your 2019 tax return until after you receive the check. It’s important to note that this money is not taxable (unlike unemployment benefits).
When and How Will I Receive it?
The IRS started sending out these payments in mid-April but for many, the process will seem very slow. If you file taxes and you’ve provided your bank account information (usually to receive a refund), you’ll receive the money via direct deposit. If the IRS does not have your bank account information, you’ll receive a check, which will take longer. You can check the status of your payment and potentially add direct deposit instructions by going to https://www.irs.gov/coronavirus/get-my-payment. Individuals who don’t file a tax return but receive Social Security benefits will receive their stimulus money the same way they receive the SSA benefit (likely direct deposit). Individuals who don’t file a return and don’t receive Social Security Benefits may need to provide some information to the IRS in order to receive payment and can find out more information at https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here.
Any Tips for How to Best Use the Money?
Now, if you’ve made it through all that and you have received or are expecting to receive a check, it’s important to think about how you might use it. Regardless of your financial situation, I suggest you be intentional about how you use it. In other words: make a plan and tell the money where to go. Here are a few thoughts:
If you need it to pay the bills, that is the intended purpose. Use it - prioritize buying necessary groceries and keeping a roof over your head.
If you’re at any risk of losing your job or experiencing a decrease in income, save it. Add it to your emergency fund or use this cash to establish one just in case you need to use it.
If you’re still working, there’s no of your income decreasing, and you have an emergency fund, consider paying off high interest rate debt.
If you have stable income, an emergency fund, and no debt you have a few other options:
Put it towards your future goals. If you’re saving for a car, a down payment for a home, your child’s college education, retirement, a vacation to somewhere other than your back yard once this is all over, or whatever goal it may be, this can help get you there a little faster.
Use it to buy something you want to help stimulate the economy. Personally, I’d love to see you spend locally if possible.
Give it to someone in need or a charitable organization that could really use the support. I’ve been elated to hear that some of my clients already had plans to use the stimulus check to give to others. For some folks, this doesn’t feel like a lot of money and they don’t really need it, but they see people and organizations who could benefit greatly. Fun Fact: the CARES Act also allows you to deduct $300 of charitable donations on your 2020 tax return if you don’t itemize – it’s not a lot but it’s something.
While these stimulus checks can only go so far, they can certainly help whether you’re using it to buy groceries, saving it, paying off debt, putting it towards a future goal, or helping others. The way you use it should depend on your specific financial situation.