Economic Stimulus Payments (Article)
Economic Stimulus Payments
Information on COVID Related Stimulus Payments
On March 27, 2020, the Federal Government passed the $2 Trillion CARES Act that sent most Americans $1,200 each and $500 per child. The full amount was sent to individuals earning less than $75,000 single and couples earning $150,000 with a phase out. Individuals making over $99,000 and couples over $198,000 did not receive anything.
On December 29th, 2020 the second round of economic impact payments was approved, and individuals received $600 per person including children with the same phase out calculations.
The American Rescue Act was signed into law March 11th, 2021 and is currently in process of paying out. This round includes $1,400 per person, to include children, but with different phase out rules. The full amount will still be received by individuals below $75,000 and couples at $150,000 but are now cut off at $80,000 and $160,000.
What if you did not get your payment? Assuming you qualified, the biggest reason you would not have received one of the first two payments is that either you did not file your 2019 taxes, or you did not provide the IRS with banking information. The best way to get this money is to file your taxes. When you file your 2020 taxes, they will ask you if you received the stimulus payments and if you did not, and qualify, you will receive them as a refundable tax credit on your return. Additionally, filing your 2020 tax return and signing up for direct deposit will speed up receiving your American Rescue Act payments.
Unfortunately, beyond that there is not much else you can do. If you are not sure if you qualify you can go to the IRS “Get My Payment” webpage https://www.irs.gov/coronavirus/get-my-payment and check on the status of your payment. If the tool tells you that the payment status is unavailable that does NOT mean you are not getting a stimulus payment. It could just mean that your payment has not been processed yet or that the payment was returned to the IRS because the post office was unable to deliver you a prepaid debit card.
So, if you are getting a stimulus check, what should you do with the money? Just like any other income you need to apportion it appropriately with the priority being your four walls: food, utilities, housing, and transportation.
Next look at your emergency fund. For many 2020 was a hard lesson on the importance of having an emergency fund. Use the stimulus to ensure your emergency fund is well funded with 3-6 months of expenses.
If all of that is good, you have options. We recommend using it first to pay down debts if you have them. Credit card debts are a no brainer and with student loans currently at 0% interest it is a great time to make some progress on them.
Looking to invest? You could make contributions to a Roth IRA or an after-tax brokerage account. These are great ways to utilize this money or, you can spend it. Spending this money will help local businesses and restaurants get through the COVID pandemic.
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