Congress is gearing up to send out stimulus checks to Americans across the country to combat the recession being created by the coronavirus pandemic. With stores, restaurants, and more being closed, and most other Americans forced to work from home, the country is gearing up for a recession or depression that is hasn't seen in almost a century.
With lessons learned from the Depression and Great Recession, one of the biggest ways to stimulate the economy and keep American's financially safe is to simply give them cash to spend - to pay rent, buy food, and take care of their families.
Let's look at the history of stimulus checks, and give you an idea of what to expect, how to prepare, and what you should seriously consider spending your stimulus check on given what we've learned from history.
Note: Currently, the stimulus checks are a proposal. We will update this page with all the information when it passes Congress (which should happen this week).
Quick Navigation The 2020 Covid-19 Stimulus ChecksOther 2020 Stimulus ProgramsFamilies First Coronavirus Response Act (FFCRA)Student Loan ReliefHistory Of Stimulus ChecksHow To Get A 2020 Stimulus CheckBest Ways To Use Your CheckBeware Of Scams2020 Stimulus Check FAQs The 2020 Covid-19 Stimulus ChecksRight now, the stimulus checks are just a proposal, but here's what they are proposing as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The baseline of the proposal is adults would get $1,200 each and children $500 each. The benefit would start to phase out at a rate of $5 for every additional $100 in income.
The benefit phaseout starts at:
$75,000 in adjusted gross income for singles
$112,500 for heads of household
$150,000 for married couples filing jointly
Completely phase out at $99,000 for singles and $198,000 for couples (with no children)
The current bill as written requires you to have filed a 2019 tax return, and it would send the benefit checks to the address listed on the tax return. See below for updating your information with the IRS.
Note: This may not be a one-time check. There are many proposals to make this a monthly check, but as of now, none of those have gained traction.
Other 2020 Stimulus ProgramsBeyond the direct checks to individuals and families, there are a variety of other programs that are providing tax credits and loans to individuals and small businesses.
We will update this section as programs emerge.
Families First Coronavirus Response Act (FFCRA)The biggest stimulus program right now is the Families First Coronavirus Response Act (FFCRA), which expanded paid leave and sick leave for millions of Americans. It also has tax breaks to help small businesses provide these expanded benefits.
The biggest component of the FFCRA is the emergency paid leave. You can qualify for leave if you meet any of the following six requirements:
You are subject to a federal, state, or local quarantine or isolation order related to COVID-19.
You are quarantined at the direction of a health authority or healthcare provider to prevent spread of COVID-19.
You are experiencing symptoms of COVID-19 and is seeking a diagnosis.
You are caring for another person who is subject to #1 or #2 above.
You are caring for a child or another person due to closure of a school or other facility due to COVID-19.
You are experiencing similar conditions that have been specified by the US Department of Health and Human Services (HHS).
Full-time employees can get up to 80 hours of paid leave, which would be covered by the US Government (so it's not a monetary burden to your employer).
The amount of the benefit is determined by which reasons you qualify for. If you qualify due to reasons #1, #2, or #3, you will receive the greater of: your rate of pay, Federal minimum wage, or your local minimum wage. The maximum benefit is $511 per day, or a total of $5,110.
If you qualify due to reasons #4, #5, or $6, the amount is 2/3's the rate above, with a maximum benefit of $200 per day, or a total of $2,000.
These are other benefits as well, check out this guide for more.
Student Loan ReliefThe Department of Education has issued a lot of special options for families with student loan debt during this crisis.
Some of the key highlights include a student loan interest freeze, the ability to defer payments for at least 60 days with no penalty, and more.
We have a full guide to it here: Coronavirus student loan relief programs.
History Of Stimulus ChecksStimulus checks aren't a new idea. In fact, in the last 20 years, the United States has given out stimulus checks three times. They've been used as a tool to combat major recessions in the United States.
Here are some past examples:
2001: Economic Growth and Tax Relief Reconciliation Act of 2001 provided $300 for single filer taxpayers and $600 for joint filers.
2008: Economic Stimulus Act of 2008 provided $300 to $600 per person, $1,200 for married couples, and $300 per child.
2009: Economic Recovery Payment of 2009 provided $250 for beneficiaries of select retirement programs, including Social Security, Veterans Affairs, and Railroad Retirement.
How To Get A 2020 Stimulus CheckThe Department of Treasury will hopefully start sending out checks to qualified households as soon as possible. They typically use the IRS records to send out checks to families.
In past stimulus checks, you were have had to file a previous year's tax return. It appears that may be a part of the plan this year. Current proposals require a 2019 tax year return to have been filed. If you haven't filed your taxes yet, don't delay and get started now.
In 2008, it took two months to start distributing the stimulus checks after the law was signed. President Trump is pushing to have that start much sooner this year.
How Does The IRS or Treasury Know My Address?
Checks will start using information from tax returns. The IRS has an "Update My Information" tool that allows you to provide your updated address to make sure your check isn't delayed.
Here is the tool: IRS Update My Information Tool.
How Will The IRS Send My Money
Direct Deposit is the best way to get your stimulus check because it will be the fastest. The Treasury Department will use your tax return information to process a direct deposit (just like your tax return).
If you need a paper check, it typically adds 2-3 weeks to the process for the Treasury Department to print and mail your check.
Best Ways To Use Your CheckOne of the biggest questions I get is how to use your stimulus check to do the most good. This is a tough question because it varies so much from person to person, and family to family.
However, here's an order of operations to consider for the best ways to use your stimulus check.
First - Get A Bank Account
If you don't have your own checking account, you need one now. Yes, you can receive a paper check and use a check-cashing service, but that's a waste of your own money.
Check out this list of the best free checking accounts and set yourself up for success right now. If you've been denied a bank account in the past, here's a list of second-chance checking accounts that will let you open an account.
Essentials
Obviously, if you're struggling, you have to take care of yourself first. Food, housing, medical supplies, children's essentials. Take care of yourself and your family. That's the biggest reason these checks are being issued - so Americans can take care of themselves in this time of crisis.
Eliminate Debt
Chances are this crisis is going to last a substantial amount of time. One of the biggest things that hurts most household budgets is debt. If you have debt, like credit cards or student loans, it could make sense to apply the payment to your debts.
If you have student loans, there are other coronavirus relief programs for student loans, and it might not make sense to put it towards your student loan debt.
?Save For The Future?
Most of us have upcoming expenses we may not be able to avoid. This could be a tax bill (property taxes or other - and remember the IRS moved the tax deadlines this year), or something else.
Plus, we're going into a big period of uncertainty, and job losses are spiking. You need to protect yourself and your family, and cash is king.
If You Don't Need The Money, Donate It
If you are financially prepared, consider donating your stimulus check to an organization that can use the money. Since fundraisers are basically non-existent right now, and charities everywhere are seeing increased demand, anything you can do will help.
Beware Of ScamsWith everything, if money is involved, there is a scammer out there trying to take it from you. We see this every year with tax refunds - those robocalls pretending to be the IRS and getting you to pay them. We're undoubtedly going to see it with the stimulus checks as well.
If anyone calls you about the stimulus checks, it's 100% a scam. The government doesn't call people. They send letters and mail. That's how you'll be contacted.
Second, the government doesn't need your personal details! They have all your information already. If you need to update your information - use the IRS website we provided above.
Finally, you never have to pay anyone anything to receive a check. This is your money, you don't need to pay for it.
2020 Stimulus Check FAQsOkay, that was a lot of information. Here are some basic FAQs about everything.
How much will my stimulus check be?
The baseline of the proposal is adults would get $1,200 each and children $500 each. The benefit would start to phase out at a rate of $5 for every additional $100 in income.
How quickly will I receive my stimulus check?
Based on history, likely about 2 months after the government passes the law. However, they are working to make it much faster this time.
How does the government know where to send the check?
The government will send it to the address on your tax return. You must have filed a 2019 tax return in order to get a stimulus check.
What if I need to update my information?
The IRS has an "Update My Information" tool where you can submit your updated address and information so that you don't miss anything from the IRS, or miss your stimulus check.
Is this a one-time check or an ongoing check?
Currently, it's set to be a one-time check. However, there are multiple proposals to make it ongoing.
How do I know if I qualify for a stimulus check?
You must file a 2019 tax return, and meet the income requirements of the program. Currently, the checks completely phase out at $99,000 for singles and $198,000 for couples (with no children).
Can I use my check for student loan debt?
Yes, you can, but it might not be the best way to use your check right now given that student loan interest is frozen. You might consider paying off other debts if your essentials are taken care of.
The post Coronavirus Stimulus Checks: What To Expect appeared first on The College Investor.
Comentarios