Congress is gearing up to send out a second round of 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: On July 27, 2020, the Senate is expected to announce their proposal for a second round of stimulus checks. We're calling the CARES Act Stimulus Round 1, and the American Workers, Families, and Employers Assistance Act Stimulus Round 2.
Updates: This post is updated as fast as possible. The IRS is announcing updates almost daily. Please check the dates of comments if you're looking for specific answers.
Round 2: American Workers, Families, and Employers Assistance Act Stimulus Checks
The Senate revealed their version of the American Workers, Families, and Employers Assistance Act on July 27, 2020.
On May 15, 2020, the HEROES Act passed the House, and it included a second round of stimulus checks for Americans. The American Workers, Families, and Employers Assistance Act is very similar to the House Act for stimulus checks.
Remember - this still has to be negotiated - it's not law yet. But given the bills are so similiar, we don't see this as much of a sticking point.
This next round is slightly more generous that the first round - but a lot of the same rules apply.
The checks are the same for adults: $1,200 for singles, or $2,400 for couples.
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)
Eligible dependents also will receive $500 each.
The new bill also has a few correction:
- They make it clear that SSA, SSI, SSDI, VA, and RRB recipients don't need to file a tax return
- Unlike under the CARES Act where the additional $500 was limited to taxpayers with a dependent child under 17, the additional $500 will now be provided to taxpayers with dependents of any age.
- It would remove the offsets for child support
- It would prevent state banks from garnishing bank accounts with stimulus checks
Note: This isn't a recurring check. It's another one-time payment. The recurring checks have been proposed, but haven't gained any traction.
Round 1: CARES Act Stimulus Checks
The COVID-19 response has included stimulus checks. Here's what they are as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The stimulus check amount for 2020 is adults would get $1,200 each (so $2,400 for couples filing jointly) and children $500 each (children are qualifying children according to IRS rules claimed in the household under 17 years old). The benefit would start to phase out at a rate of $5 for every additional $100 in income.
You also cannot be claimed as a dependent on someone else's return.
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 or a 2018 return if you haven't filed your 2019 return yet by the time the checks go out, and it would send the benefit checks to the address listed on the tax return. See below for updating your information with the IRS.
Update: Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return , the IRS has released a Non-Filer Stimulus Check form you can fill out.
For Those On Social Security
Updated on April 1, 2020.
The IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2019 or 2019. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return.
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.
If you need to add or update dependents that qualify, use this form: IRS Non-Filer Stimulus Check Info Form.
For Those On SSDI
This law will also include payments to those whose income comes entirely from non-taxable benefits, such as SSDI benefits.
No action will be required and your check will be delivered in the way you get your normal benefits (whether direct deposit or paper check).
The only exception is if you need to claim dependents. In that case, you need to use the Non-Filer Form or file a simple return. Note: this must be done by April 22, 2020 or you might not get your dependent check with your regular stimulus check.
For Those On SSI
Updated on April 15, 2020.
This IRS announced those that receive Supplemental Security Income (SSI) will automatically receive automatic Economic Impact Payments (stimulus checks). No extra steps will be necessary.
The IRS estimates that your payments will go out in early May.
However, if you have eligible dependents, you need to file a simple tax return. You can also enter dependent information if you're an SSI non-filer and have dependents that are eligible. Note: this must be done by April 22, 2020 or you might not get your dependent check with your regular stimulus check.
Read the IRS notice here.
For Those Who Receive VA Benefits
Updated on April 17, 2020
Veterans and their beneficiaries who receive Compensation and Pension (C&P) benefit payments from VA will receive a $1,200 Economic Impact Payment with no further action needed on their part. Timing on the payments is still being determined. Our guess is early May based on what we're hearing.
If you have a dependent, you may still need to file a simple tax return to claim your dependent. Note: this must be done by April 22, 2020 or you might not get your dependent check with your regular stimulus check.
Read the IRS notice here.
Is This Income, A Tax Credit, Or What?
This stimulus check is a refundable tax credit for 2020, being paid to you early. You will have to claim in on your 2020 taxes, but there is nothing to pay back... unless:
- You received an incorrect amount based on household or filing (such as you're now divorced and should have received just a single check, etc.).
- You received a check for a deceased person (i.e. you received $2,400 because you received an extra $1,200 for your spouse - you'll be required to pay back the extra $1,200).
- We are currently uncertain what happens if your earnings in 2020 exceed the AGI limits. However, it appears they will not claw back the check if your 2020 earnings exceed the AGI limits.
Other 2020 Stimulus Programs
Beyond 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 Relief
The Department of Education has issued a lot of special options for families with student loan debt during this crisis.
The law that just past includes a freeze on payments and interest on student loans through September 30, 2020. This is a huge win for borrowers. However, it's not expected to be extended.
There are also no other plans for any type of student loan forgiveness.
We have a full guide to it here: Coronavirus student loan relief programs.
Expanded Unemployment Benefits
To cope with the massive amounts of jobs being lost, Congress also expanded unemployment benefits to those that have lost their job due to the COVID-19 crisis.
Eligible workers can get up to $600 extra a week from the Federal government, on top of state benefits until July 30, 2020. This is expected to be reduced or eliminated in future rounds of stimulus.
Learn more in our full guide here: Expanded Unemployment Benefits Due To Coronavirus.
History Of Stimulus Checks
Stimulus 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 Check
The 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.
You must have filed a 2019 tax return, or a 2018 tax return if you haven't filed 2019 yet since the tax deadline was extended. If you haven't filed your taxes yet, don't delay and get started now.
If you are receiving Social Security retirement income, or SSDI, and are not required to file a tax return, the IRS will use your information on file with the Social Security Administration to send your stimulus check.
The same is true for individuals on SSI or those that receive VA benefits.
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.
For those that may qualify and didn't file a tax return, and aren't eligible to have their information automatically used by the Social Security Administration, there will likely be an IRS form you can submit later this year.
You can read our full guide to How To Get Your Stimulus Check If It Doesn't Come Automatically.
When To Expect My Stimulus Check
The Treasury Secretary has said they hope to start issuing checks within three weeks of the bill passing, with the remainder of the checks to be mailed by the end of May. The IRS has testified to Congress that it could take up to 20 weeks to deliver most of the checks. That's 5 months - that means up to September for some folks.
For those on SSI, SSDI, or VA benefits, the IRS said it's working with it's partner agencies (the Social Security Administration and Department of Veterans Affairs) to get the checks sent out in early-to-mid May.
Based on past checks, we think this is pretty aggressive, and see it more likely being in May.
You can check the status of your stimulus check here: IRS Get My Payment Tool. Note: This tool only works for those that are required to file a tax return. Social Security recipients and others won't be able to track their check here *yet*. Plus, your checks aren't expected until May.
The Washington Post shared an IRS internal memo which said paper checks will start going out April 24 and continue until September, based on the taxpayers earnings. If you're waiting on a paper check, see these dates to get your check mailed:
- Earning $10,000 or less - April 24th
- Earning $20,000 or less - May 1st
- Earning $30,000 or less - May 8th
- Earning $40,000 or less - May 15th
- Earning $50,000 or less - May 22nd
- Earning $60,000 or less - May 29th
- Earning $70,000 or less - June 5th
- Earning $80,000 or less - June 12th
- Earning $90,000 or less - June 19th
- Earning $100,000 or less - June 26th
The schedule continues in the same rate - increasing to those earning $10,000 more each week. This continues until the final checks, to joint taxpayers who earn $200,000 or less, on September 4th.
Remember, these are estimates!
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.
If you aren't required to file a tax return, you can use this tool for non-filers: IRS Non-Filer Tool.
Here is the tool: IRS Update My Information Tool.
Can I Update My Direct Deposit Information?
The IRS announced plans to roll-out a new website that would allow you to update your direct deposit information. More to come on this.
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.
If you filed a return and got it on a financial instrument (like a prepaid card or tax advance loan), you'll receive a paper check.
Is My Stimulus Check Subject To Offset Or Garnishment?
No, your stimulus check is not subject to an offset for Federal debts, tax debt, student loans, unemployment. However, it is subject to offset for child support.
It may also be subject to garnishment by your state. State laws vary - and while some states have passed laws to prevent this, other states haven't.
Best Ways To Use Your Check
One 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.
Yes, it's not required... it's just the smart money move and I'm here to help you make better money decisions!
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 Scams
With 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 FAQs
Okay, that was a lot of information. Here are some basic FAQs about everything.
How much will my stimulus check be?
The baseline of the law 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?
The Treasury Department is trying to get checks out as early as April and through May, but that would be aggressive based on history.
The IRS estimates that most checks will be sent in April and May, but continue all the way through September.
You can use the IRS Get My Payment Tool to check the status.
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 2018 or 2019 tax return in order to get a stimulus check.
If you're a SSA, SSDI, SSI, or VA benefit recipient, the government will send your check to your payment method on file (including Direct Express cards).
If you aren't required to file a tax return, you must use this new form: IRS Non-Filer Stimulus Payment Tool.
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 2018 or 2019 tax return, and meet the income requirements of the program. The checks completely phase out at $99,000 for singles and $198,000 for couples (with no children). There is no income minimum.
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.
Can they garnish my stimulus check for child support, back taxes, or student loan debt?
No, your stimulus check is not subject to offset, with the exception of past due child support. However, your state can also garnish your check, and some states are actively doing this.
Will I have to pay this back?
This check is a tax credit for your 2020 return. It's technically based on your 2020 income. So, if your income rises above the AGI limits, you might have to pay it back (this is uncertain at the moment).
Another scenario is if your filing status changed and you were overpaid, you may also have to pay back the difference.
Finally, the IRS has confirmed that you will owe money back if you receive money for a deceased person (such as a deceased spouse).
Before You Comment:
First, search the comments. Many questions have been answered already.
Second, check the post dates. We update this article with the latest information as we get it from the IRS and other sources. Things have changed (a lot, honestly) since this was first announced. Some comments may no longer be accurate or relevant. Some of the policies have changed. See the above article for reference.
Third, all comments are moderated. Don't post the same question multiple times. Realize your question may not be answered if it's similar to the 1,500+ other comments that have been made.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.