On March 27th the United States government passed the CARES Act. The Senate approved a $2 trillion stimulus bill to keep the economy afloat and sustain Americans’ immediate needs amid the ongoing coronavirus pandemic. Unemployment claims have skyrocketed and broken previous records. In the last two months alone, more than 26 million people have filed for unemployment.
Even though states are slowly opening back up again, the month’s long shutdowns and shelter-in-place orders have left most Americans in dire financial situations. The federal coronavirus relief package was designed to allocate stimulus checks of $1,200 to each adult and $500 for every child. Direct deposits started to be dispersed in mid-April. The funds were intended to help families and individuals that have been financially impacted by the shutdowns. And in some cases, there was a hope that the money would give the economy a jolt.
There have been many in the House of Representatives that have argued the relief funds have fallen short of providing adequate funding for families in need. Nevertheless, money is money, and every little bit helps. If you have yet to receive your COVID-19 stimulus check, here is a link so you can check on the status of your payment.
If you still have unanswered questions, you’re in luck! We’re here to answer the most frequently asked questions about coronavirus stimulus checks and offer some wise suggestions so you can make sure your money is put to good use.
Stimulus Check FAQs
There has been a lot of confusion since the pandemic began. While there have been global health crises in the past, most of us haven’t experienced anything quite like COVID-19. When it comes to your coronavirus stimulus check, here are some things you may be wondering.
Who is eligible for a coronavirus stimulus check?
While most Americans are eligible, there are some stipulations. The stimulus checks are based on your annual income. If you are a single tax filer and make $75,000 a year or less, then you are entitled to the full $1,200. For married couples filing jointly, it would be $150,000 or less. And $112,500 if you file as head of household. Families will be awarded an extra $500 per child under the age of 17.
If you make over those amounts, you will receive a reduced payment. The way it shakes out is for every $100 over the threshold, you will be deducted $5 from your stimulus check. H&R Block has provided a stimulus check calculator so you can see exactly how much you stand to get.
If you make more than $99,000, you won’t be eligible for the payment. But keep in mind that even if you make more than the maximum amount you are still eligible for the $500 payment for each child living in your household.
Those who are ineligible: People who are filed as dependents on someone else’s tax returns are not eligible and non-citizens without green cards.
What if your income has changed in the past few years? What income bracket do you base it on?
Since most people haven’t filed their 2020 taxes, the government is basing payments on your 2018 or 2019 tax return to decide on how much your stimulus check is for. The deadline for your 2019 taxes is July 15, 2020. If you happened to make more in 2018 than you did in 2019, then the government will adjust your stimulus check based on your projected 2020 income. However, any extra monies not accounted for will show up in your 2019 tax refund check.
As of yet, the federal government hasn’t come up with a solution for those whose income exceeded the maximum amount, but then lost their jobs as a result of the pandemic and have no income. There is talk swirling that a second stimulus check may be issued, but that has yet to be seen.
Do you have to pay taxes on your stimulus check?
Good news here. The answer is ‘no’. The COVID-19 stimulus check is a tax-free payment that goes directly to you and it is all for you.
What about social security recipients that no longer pay taxes, are they eligible?
Yes. Those living on a fixed income that rely solely on their social security or SS payments as a form of income, and who don’t currently file taxes, are still eligible to receive coronavirus relief funds.
Best Ways to Put Your Stimulus Check to Good Use
So you have your stimulus check and are wondering how to spend it. The way you spend your stimulus check will greatly depend on your current financial situation. Circumstances like becoming recently unemployed, minimized work hours, size of family, mortgage or rental payments, all play a major factor.
Remember, these stimulus checks are supposed to handle your immediate financial needs. If you are one of the fortunate few that have held on to your job throughout this mess, then this is a great opportunity to get ahead and pay off debt.
Ultimately it is up to you. But in case you were waffling and on the fence about how to best spend your stimulus check, here are five suggestions that you may want to consider.
- Cover the Essentials – First and foremost you’ll want to make sure that your basic needs, and the needs of your family are being met. If you have reduced hours or someone in your family has lost their job due to the coronavirus, you’ll want to budget your money wisely. Ensuring that you and your family have enough food should be top priority.
- Pay Bills & Pay Down Debt – Paying down debt is never a bad financial decision. If you have been furloughed and are receiving unemployment benefits, look at the stimulus check as an opportunity to get ahead on bills and get rid of debt. If you have past due balances at your utility company, insurance or car payments, or credit cards, PAY THEM NOW! This is an excellent opportunity to get ahead and never look back. Always pay the high-interest credit cards and loans off first.
- Get Ahead on Your Mortgage Payments or Future Rent – In some states, there is a moratorium on rent payments and banks are working with homeowners to defer or postpone mortgage payments. However, this is only temporary. At some point in the near future, all of those payments will be due again. Don’t let it come crashing down around you. Take this gift of tax-free money and either continue to make your mortgage payments or put the extra money aside for them your mortgage payments resume.
- Emergency Funds & Savings – Surprisingly enough, the majority of Americans still don’t have adequate savings. In fact, according to Statista, nearly 70% of Americans have less than $1,000 in a savings account and over 45% have saved nothing. Some households are just one emergency away from financial ruin. If your basic needs are being met, your debts are either paid off or you are in a sturdy financial situation, put your $1200 towards an emergency fund or stash it in a savings account.
- Invest in the Future – If there is one thing 2020 has taught us is that things are uncertain. Planning for the future is just as important as paying off debt. It all works to help you and your family in times of future economic instability and in the event of an emergency. If you are financially upright and have a growing child in your home, this money could be used to bolster their college fund or put into a trust for them when they turn 18. Another idea is putting your money into an IRA or retirement account so you’re set for life.
Whatever you decide to do with your stimulus check, make sure it’s a decision you can live with. There may be no further stimulus payments in the future, so make savvy financial decisions and consider the long term needs of yourself and your immediate family.
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OakTree Law is open for business during the COVID-19 crisis. If you’re in need of an experienced real estate attorney and #QuarantineLife has left you in limbo, reach out to us now. We’ll help explore your options, determine the kinds of payments you can afford, and whether alternatives to foreclosure may be available to you. Call us at 888-219-0654 for a free phone consultation today!