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second stimulus covid-19

Congress has approved two rounds of stimulus checks. The first round included a $1,200 payment from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law last March. And now, President Trump has signed a second $900 billion economic relief package on December 27 that includes another stimulus check paying up to $600 per person. While your second stimulus payment will be half the size of the first one, there are some important differences that could help you out. Let’s compare how much both stimulus checks pay out, who qualifies for them, and how soon you could get yours.

If you can afford to, try saving or investing your stimulus check money. Talk to a financial advisor today.

How Big Will My Stimulus Check Be?

The CARES Act paid up to $1,200 for each qualifying person, but the new COVID relief package will pay half that – up to $600 for qualifying individuals. House Democrats voted on December 28 to raise the second stimulus payment up to $2,000, which President Trump has also demanded. But Senate Republicans blocked the vote, effectively killing the increase.

Now after a runoff election in Georgia, the Senate will be divided 50-50 evenly between Democrats and Republicans, and Vice President Harris could cast a tie-breaking vote in favor of a stimulus check increase. President Joe Biden presented on January 14 a new $1.9 trillion coronavirus relief package that includes a third round of stimulus payments up to $1,400.

The size of both stimulus checks depend on your adjusted gross income (AGI) and tax filing status. Your AGI is your gross income (which includes wages, dividends, capital gains, and other types of income) minus college loan interesthealth savings account payments, contributions to a traditional IRA and other adjustments deducted during the tax year.

Here’s how the second stimulus checks break down by income level, for single and joint filers:

Second Stimulus Check Amounts for Single Filers
AGI Payment
$75,000 $600
$77,400 $480
$79,800 $360
$82,200 $240
$84,600 $120
$87,000 and up $0
Second Stimulus Check Amounts for Joint Filers
AGI Payment
$150,000 $1,200
$154,800 $960
$159,600 $720
$164,400 $480
$169,200 $240
$174,000 and up $0

By comparison, here’s how the first stimulus checks broke down:

First Stimulus Check Amounts for Single Filers
AGI Payment
$75,000 $1,200
$80,000 $950
$85,000 $700
$90,000 $450
$95,000 $200
$99,000+ $0
First Stimulus Check Amounts for Joint Filers
AGI Payment
$150,000 $2,400
$160,000 $1,900
$170,000 $1,400
$180,000 $900
$190,000 $400
$198,000+ $0

 

You should note that both the first and second rounds of stimulus checks also provide extra payments for families with qualifying dependents under the age of 17. The second stimulus checks will pay up to $600 for each qualifying dependent under the age of 17. So if you filed your taxes as a married couple with four children, you could get up to $3,600. The second stimulus check currently has no limit on the number of dependents that you can claim as long as they are within the age requirement and you claimed them on your tax return. Here’s a breakdown of the second stimulus check for a head of household with one child:

Stimulus Check Amounts for Heads of Household & 1 Child
AGI Payment
$112,500 $1,200
$116,500 $1,000
$120,500 $800
$124,500 $600
$128,500 $400
$132,500 $200
$136,500 and up $0

That’s a slight increase from the first stimulus check, wherein child dependents got an extra $500, translating to up to $3,400 for a qualifying family of four. Here’s a breakdown of the first stimulus check for a head of household with one child:

First Stimulus Check Amounts for Heads of Household & 1 Child
AGI Payout
$112,500 $1,700
$117,500 $1,450
$122,500 $1,200
$127,500 $950
$132,500 $700
$142,500 $200
$146,500+ $0

You should keep in mind that families claiming a dependent over 17 years old could not get additional payments under the first or second rounds of stimulus checks, and those dependents could not qualify for a stimulus check themselves. This means that dependents who are college students or elderly relatives won’t qualify for the additional payment either.

Another important thing to note about both stimulus checks is that they do not count towards your taxable income for tax year 2020. In addition, the check is not seen as an advance on your 2020 tax refund, as they are entirely distinct from one another. Stimulus checks are also not a loan, so the federal government is not expecting that money to be repaid.

Use SmartAsset’s stimulus check calculator to figure out how much you could get in the latest round of stimulus checks.

How Long Does It Take to Get My Stimulus Checks?

The IRS announced on December 29 that it has started sending out the second round of stimulus checks to millions of Americans. Treasury Secretary Steven Mnuchin said that direct payments would go out a few days after the President signed the bill, and paper checks will take the longest.

For a comparison, the first stimulus checks already went out to the vast majority of Americans who are eligible for one. The IRS sent out the first electronic stimulus check payments on April 11, with most having arrived by April 15. The recipients of these initial payments were those who qualify for a check and have filed a tax return via direct deposit in either 2018 or 2019.

The first paper stimulus checks were in the mail as of April 24, 2020, with “President Donald J. Trump” printed on the memo line. This initial round of physical payments is specifically for individuals with an adjusted gross income (AGI) of $10,000 or less. Each week after this, an additional five million paper checks will be mailed to those with an AGI of $10,000 above the previous week’s limit ($20,000, then $30,000, then $40,000 and so on). Unfortunately, that means that some Americans did not get their checks until late summer or early fall.

Recipients of Social Security retirement benefits, Social Security survivor benefits, Social Security disability benefits, Supplemental Security Income (SSI), Railroad Retirement benefits and VA benefits who have their bank account on file with the IRS will automatically get their second stimulus check via direct deposit (this was the same for the first check as well).

The IRS will also send a mail notification roughly 15 days after your second stimulus check gets paid to you (it did this for the first check as well). This will include your check’s size and method of payment, and a phone number that you can reach out to if your payment has yet to arrive.

How Will They Send My Stimulus Checks?

Coronavirus Stimulus Checks

The IRS will send out the second stimulus checks via direct deposit, paper check and economic impact payment (EIP) card.

For reference, the majority of the first stimulus check recipients have received their payment via direct deposit. So if you set up direct deposit on a past tax return, you should have gotten your direct cash payment in your on-file bank account by about April 15. That leaves anyone getting a stimulus check in the mail last in line, especially if they have a high AGI.

The IRS’s free online portal called “Get My Payment” allows Americans to track the status of their first and second stimulus check.

If you are required to file a tax return, but you have not done so for 2018 or 2019, then you’ll need to file a 2019 return to receive a check. But if you were not required to file for tax years 2018 or 2019, the IRS is offering an online tool that allows you to enter your personal and bank account information so that you can get your stimulus check. Those who receive any of the following should not use this tool:

  • Social Security retirement benefits
  • Social Security Disability Insurance (SSDI)
  • Social Security Survivor benefits
  • Railroad Retirement and Survivor benefits

Stimulus checks can also come to you via a prepaid debit card called “The Economic Impact Payment Card.” These cards are backed by the Treasury Department’s Bureau of the Fiscal Service. If you receive one, it will arrive in a plain envelope with the sender being “Money Network Cardholder Services.”

With many stimulus checks coming by mail, the federal government has warned that Americans receiving payment this way should be on the lookout for fraud and counterfeit checks. In fact, the U.S. Department of Justice has reported that it has found “a number of look-alike IRS stimulus payment domains.”

Thinking of investing your stimulus check? Speak with a local financial advisor to put together an investing plan.

How Will the Stimulus Checks Affect My Taxes?

The IRS doesn’t consider your stimulus checks taxable income. So you will not have to report them on your tax return or pay income taxes for them.

If you are an eligible recipient who didn’t get the first or second stimulus check, you can claim a recovery rebate credit to increase your tax refund or lower your tax liability.

This means that if you expect to get money back on your 2020 tax return, you could get a bigger refund depending on how much stimulus money you are owed. And comparatively, if you have to pay a tax bill, you can use the recovery rebate credit to offset it and get a refund for the remaining amount.

Taxpayers this year will look to their tax refunds as another source of extra money during the pandemic. In 2020, the IRS paid out more than $2,500 for the average tax refund. This year, it is expecting over 150 million tax returns to be filed.

The 2021 tax season starts on February 12. You will have to file your 2020 tax return by April 15.

What to Do If a Deceased Family Member Received a Stimulus Check

If a deceased family member has received a stimulus check in their name, the IRS has issued guidance stating that the money should be returned immediately. More specifically, anyone who died before payment was received does not qualify for a check. The only exception to this is if a payment was made to joint filers and one of the spouses is still alive. If this describes your situation, you only need to return the decedent’s half of the money.

According to the IRS, if you need to return payment for a deceased loved one, here are the steps to follow:

  • Direct deposit payments, and paper check payments that have not been cashed
    • Step 1: Mail a personal check or money order for the correct amount to your state’s IRS refund inquiry unit.
    • Step 2: Make the check or money order payable to “U.S. Treasury” and write “2020EIP” and the decedent’s Social Security number or individual taxpayer identification number.
    • Step 3: In the envelope, include a note that explains why the check is being returned.
  • Paper check payments that have not been cashed
    • Step 1: Write “Void” on the back of the check in the endorsement section.
    • Step 2: Don’t staple, bend or paper clip the check.
    • Step 3: In the envelope, leave a note that details why you’re returning the check.
    • Step 4: Mail the voided check to your state’s IRS refund inquiry unit.

To figure out where to mail your stimulus check payback based on the state you live in, visit the Economic Impact Payment Information Center on the IRS website and go to Question 13.

How to Make the Most Out of Your Stimulus Check

Coronavirus Stimulus Checks

Photo credit: ©iStock.com/Kativ, ©iStock.com/SDI Productions, ©iStock.com/LucaLorenzelli, ©iStock.com/Eva-Katalin

Javier Simon, CEPF® Javier Simon is a banking, investing and retirement expert for SmartAsset. The personal finance writer's work has been featured in Investopedia, PLANADVISER and iGrad. Javier is a member of the Society for Advancing Business Editing and Writing. He has a degree in journalism from SUNY Plattsburgh. Javier is passionate about helping others beyond their personal finances. He has volunteered and raised funds for charities including Fight Cancer Together, Children's Miracle Network Hospitals and the National Center for Missing and Exploited Children.
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