Answering Your Stimulus Payment Questions

April 29, 2020 |

(From the Financial Literacy Blog) – Due to the coronavirus outbreak, social distancing has become the new normal. While people have been home doing their part to flatten the curve, the economic impact has been felt around the world. Many public-facing and non-essential businesses have temporarily closed their doors, employees have been furloughed or laid off, and there has been unprecedented public concern about the economy and personal finances. In an effort to provide economic relief in the United States, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by the president at the end of March. This $2 trillion package provides economic relief to individuals, businesses, and industries across the country.

Of the $2 trillion relief package, the $250 billion designated for direct payments to Americans has received the most attention. The Internal Revenue Service (IRS) is sending Americans up to $1,200 to help ease newfound financial struggles. However, the amount you actually receive can vary depending on your income and whether or not you have dependents. These factors, along with circulating rumors about the stimulus package, have caused some confusion. Here are the answers to some of the common stimulus package questions:

Who qualifies for a payment?

Individuals and couples with Social Security numbers are eligible for stimulus payments. However, if you are a single filer with an income of over $99,000 or a joint couple with a combined income of over $198,000, you will not be eligible. The IRS will look at your 2019 tax return to calculate your payment. If you haven’t filed your 2019 return, the IRS will reference your 2018 return. For those who aren’t required to file tax returns, you can enter your payment information in this IRS tool.

How much will I receive?

  • Single filers with an income that does not exceed $75,000 are eligible for the full $1,200 stimulus payment. For every $100 of income beyond the $75,000 mark, payments shrink by $5.
  • Married couples who file jointly with an overall income that does not exceed $150,000 are eligible for the full $2,400 stimulus payment. For every $100 of income beyond the $150,000 mark, payments shrink by $5.
  • Whatever your filing status may be, you can expect an additional $500 for every dependent you claim under the age of 17.

How and when will I receive my stimulus payment?

Stimulus payments are being delivered via direct deposit or printed checks. To reduce costs and expedite delivery, the IRS would prefer depositing payments electronically instead of mailing physical checks.

  • Direct Deposit: If you’ve already filed your 2018 or 2019 taxes and provided your direct deposit information to the IRS, you’ll be receiving your payment via direct deposit. The first wave of stimulus recipients saw the payments show up in their accounts on April 15. If you are set up for direct deposit and haven’t received anything, you can check on the status of your payment by using the IRS’ Get My Payment tool on their website. Additionally, if the IRS doesn’t currently have your direct deposit information, you can enter it using the Get My Payment tool to receive your stimulus payment sooner.
  • Physical Checks: If you don’t have direct deposit set up, or if you’d prefer to receive a physical check, the IRS will begin mailing them out this week. While around 80 million Americans received payments electronically on April 15, the IRS will be printing and mailing out 5 million checks a week. How much income you make will determine when you receive the check. Americans with a lower income can expect to receive their checks sooner than those with a higher income. To find out when you can expect your physical check, you can check this by using the IRS’ Get My Payment tool.

Will I have to pay this money back?

No, you won’t have to pay this money back. The stimulus payment is not a loan and you’re free to save, spend, invest, or donate it as you please. A lot of the confusion stems from the payment’s technical terms, as it’s referred to as an advance refund of a 2020 tax credit. This payment is a unique and fully refundable tax credit and won’t affect your return when you file next year. Additionally, this payment is not considered taxable income. You won’t owe any taxes on your stimulus check and it won’t affect your income tax bracket for 2020.