What does this stimulus package mean?
Congress has passed a $1.9 trillion coronavirus relief package, with provisions including unemployment aid, tax credits, vaccine distribution, and another round of stimulus checks. If you have an adjusted gross income of less than a certain amount you could qualify for a check.
Who does this stimulus package help?
If you have a Social Security number and have adjusted gross income of less than $75k (individuals) or $150k (married couples), and no one else can claim you as a dependent, you could receive $1,400, or $2,800 respectively. In addition, families with dependents may receive $1,400 per dependent. So a typical family of four would stand to receive a one-time payment of $5,600, as an example. There are phaseouts for individuals making between $75k – $80k and also for married couples with no children making more than $160k. Head of household filers can expect the full amount if they earned less than $112,500, cutting off at $120k.
What is the intention of the stimulus?
This bill is aimed at economic recovery. Many people are still experiencing the economic effects of the lockdowns last year, whether it is job loss, getting behind on bills, or generally spending less money and saving more. In addition to the direct payments to individuals, this bill extended an unemployment supplement that was set to expire, expanded the child tax credit another year, and provided for billions in rental and mortgage assistance. The bill also directed funds for vaccine distribution, relief for state and local governments, aid to small businesses and restaurants, and government assistance via food stamps and other programs. As you can see, this bill encompasses much more than just the stimulus checks!
When can I expect my money?
If you’ve provided your bank information to the IRS for tax purposes, like payments or refund direct deposits, you should receive your payment fairly quickly and seamlessly, without needing to do much of anything. The IRS will use the most recent tax information they have for you, likely either your 2019 or 2020 adjusted gross income (if you’ve already filed for 2020). Specific timelines have not yet been released and may depend on your bank. If your bank information is not on file with the IRS already, there may be additional steps required and the process. If you received payments last year and have not changed your address or bank, you should receive this payment the same way. However if you have filed your 2020 taxes and your income level has changed, you may no longer be eligible.
Where should I put this money when I receive it?
This is a highly personal decision and one that obviously depends on your own unique financial situation and any immediate or anticipated effects of this crisis on you and/or your family. Keep in mind that if you have not lost income and are able to continue paying your bills on time, it may be a good idea to just park the money in a savings account to give your emergency savings a boost until it may eventually be needed.
Many individuals that find themselves in a very fortunate situation and do not anticipate many, if any, financial disruptions from all this, could also consider donating a portion of their money to local charities or supporting local retail stores and restaurants that will surely continue to struggle in the coming months.
Watch out for stimulus package scams!
Newly introduced government programs and initiatives are a scammer’s best friend. Please beware of calls, emails, and even snail mail, from unknown places, or even places that appear to identify as the IRS or any government agency. No legitimate source should ever contact you requesting for you to say or enter your social security number, credit card, or bank account numbers over the phone or via email. These times of crisis can often bring out the best in most of us, but they can also present unique opportunities for scammers to prey on the most vulnerable and desperate among us. Be vigilant.
The information is provided for discussion purposes only and should not be considered as advice for your investments. Blooom does not provide tax advice. Consult a tax expert for tax-specific questions.
Published on March 23, 2021