When Will I Get My Stimulus Check?

The Coronavirus Pandemic does not yet appear to be waning in the United States. For the nation’s people, the ramifications of this event are not only emotional and physical, but also financial and economic. Part of the federal government’s response to all of these is the aid package passed in late March known as the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).

What does this legislation include? To name a few: funding for hospitals, extended unemployment insurance, interest-free loans for small businesses, as well as lending features for large corporations. However, the feature you are probably most interested in is the provision which provides stimulus checks to individuals and families. What are the details of this stimulus program, what can you expect, and how does this compare with the stimulus package during the Great Recession of 2008-09?

Your Questions Answered

At the basic level, the stimulus checks will be $1,200 for individuals, $2,400 for couples, and a payment of $500 for each child under the age of 17. These figures begin phasing out at certain income levels, which means they gradually decrease the further you get beyond an adjusted gross income threshold. For individuals, this threshold is $75,000 in adjusted gross income. For couples, this figure is $150,000 and for single parents this figure is $112,500. The adjusted gross income is based on each taxpayer’s 2018 tax return unless they have already filed a 2019 tax return.

Interesting to note is that the stimulus check will be adjusted in the future if it is found that the taxpayer earned less income in 2020 than they had in the previous two years.

How Does The Phase-Out Work?

Individuals who make under $75,000 and couples who make under $150,000 are eligible for the full stimulus check.1 For taxpayers with higher income, the amount is reduced by $5 for each $100 above $75,000, or $150,000 for couples - up to $99,000 or $198,000. This means that individuals with an income higher than $99,000 are not eligible to receive a stimulus check and neither are joint filers with an income over $198,000.                 

How Will I Receive My Payment? 

Stimulus payments will be processed using electronic deposit for all taxpayers that have these instructions on file with the IRS. This would be on file if you have previously received a tax return via electronic deposit. If you believe the IRS does not have your electronic deposit information, the Treasury Department plans to create an online portal where you can provide this information. Doing so may result in faster payment of your stimulus check. 

If I Usually Do Not File a Tax Return, How Can I Receive a Check?  

Some persons do not regularly file a tax return. These include low-income taxpayers, seniors, or Social Security recipients. For these groups to receive a stimulus check, they must file a simple tax return. The IRS website will soon have a link to help these individuals navigate this task. Note that filing this simple tax return for purposes of the stimulus will not result in an individual owing tax.

What Is the Difference Between a Stimulus Check and a Tax Credit? 

The stimulus check is the same as a tax credit, and it is specifically an advanced refundable tax credit, meaning it is a refund allotted to you and is also sent in advance of the 2020 tax return.3 A refundable tax credit differs from a nonrefundable credit, which only applies to the amount of taxes you owe and is not available as a refund to you otherwise.

Is The Stimulus Check Taxable?

Because tax credits are not income, and the stimulus is a tax credit itself, these checks will not be taxable. 

A Look Back On Prior Stimulus

The George W. Bush administration delivered stimulus checks in 2008 in response to recession. How did these compare with the 2020 stimulus package? In 2008, individuals and couples were eligible for tax rebates on the first $6,000 or $12,000 of income. Individual taxpayers received up to $600 and couples up to $1,200 with an extra $300 per child. Payments phased out with incomes over $75,000 for individuals and $150,000 for couples. 

In 2009 the Obama Administration provided stimulus checks via the American Recovery and Reinvestment Act (ARRA). One-time checks of $250 were only sent to recipients of Social Security, those who received Supplemental Security Income, veterans and railroad retirees. Individuals with earnings between $6,450 and $75,000, however, received tax credits of 6.2 percent on earned income up to $400 ($800 per couple) in 2009 and 2010 as part of the Making Work Pay (MWP) tax credit. 

Studies indicate that in 2008, many individuals chose to either save their checks or pay off debts. In 2009, studies showed that GDP and employment increased in part due to the ARRA. A big difference is that the 2009 package utilized tax rebates, which acts as a tax cut rather than a physical check in the mail. Because Americans may not have realized the benefits from the ARRA, it is thought this package did not have as robust an impact as it could have.

Just as the full impact of the pandemic in 2020 won’t be realized for weeks and months ahead, so to must we wait to see what impact the CARES Act will have on the American economy. As stimulus checks begin to reach the hands of everyday Americans, we will start to see the unfolding effects of government action.

The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors.