2019 taxes

Today is April 15th, and it appears that economic impact payments passed as part of the CARES Act, also known as 2020 stimulus checks, are now being direct deposited into people’s accounts.

If you haven’t received your stimulus direct deposit yet, and you did not file your 2018 or 2019 taxes, you may need to go to the government site for “non-filers” and enter your payment information.

Also, if you did file you can go to the “Get My Payment” page via the same link, and check your payment status, confirm your payment type and enter your bank account information for direct deposit if the IRS doesn’t have your direct deposit information. While the portal was buggy at first, the IRS updates to taxpayer data have improved things.

For most people the coronavirus stimulus checks are sorely needed with millions of new people filing for unemployment in the past few weeks due to the COVID-19 pandemic.

It is estimated that the 4 week total for unemployment claims will top 22 million, roughly one in eight in the workforce.

If you’re out of work due to a layoff, furlough or other reason it’s important to file for unemployment insurance right away, and then to look into making sure you’ve done everything you need to in order to claim your first stimulus check.

With individuals able to claim a $1,200 payment, and couples collecting $2,400, the money should help plug some holes. If couples have eligible children under 17 they can also collect $500 per child.

A hypothetical family of 4 (like ours!) would be able to collect an economic impact payment of $3400.

With the stimulus payments starting to go out today, people are already starting to talk about a possible second stimulus check.

Today we’ll explore what people received for the first stimulus payment, who was eligible to receive it. Then, we’ll explore the following question:

Will there be a second stimulus check for 2020?

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The First 2020 Stimulus Check Details

As the COVID-19 virus began to spread it was clear that extraordinary measures would need to be taken in order to give help to states, businesses, the health care industry and to individual taxpayers.

To date we’ve had 3 coronavirus aid packages passed by Congress and signed into law by President Trump.

• Coronavirus Aid Package – Phase 1: This $8 billion package passed in March included emergency spending to boost funding for testing of the virus, money to help pay for vaccines and help fund costs of medical expenses related to the virus.
• Coronavirus Aid Package – Phase 2: Phase two was signed into law in mid-March and included $100 billion in paid sick and family leave protections, free testing for many, expansions of unemployment assistance and more.
• Coronavirus Aid Package – Phase 3: The third phase of coronavirus aid, the Coronavirus Aid, Relief and Economic Security (CARES) Act, was signed into law at the end of March. It is a $2.2 trillion stimulus package designed to give direct payments to individuals and small businesses in order to help during this extended mandatory shutdown. It also expands on existing unemployment insurance benefits giving an additional 13 weeks of unemployment, and a bump in maximum weekly benefits of $600 through 7/31/20. It also gives unemployment benefits to some who typically don’t receive them, gig workers and self-employed individuals.

Who Is Eligible For The First Stimulus Check?

With the first stimulus checks being sent out let’s examine all of the details about who gets them.

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First of all, who is eligible to receive the first stimulus payment?

Just about anyone that has a Social Security Number and who isn’t claimed as a dependent on someone else’s return. They just have to make less than the income phaseout range to earn the full refundable tax credit.

• Individual taxpayers get a $1,200 payment.
• Couples get $2,400.
• If you have a qualifying child based on the same criteria as the Child Tax Credit (16 and under on 12/31/2020) you’ll get an additional $500 for each child.
• Once taxpayers reach an adjusted gross income threshold of $75,000 ($150,000 couple) the refundable tax credit begins to phase out at a rate of $5 for every additional $100 above the limit. Once income reaches the level of $99,000 ($198,000 couple), the credit is phased out completely. 

The income range is determined from your 2019 taxes. If you haven’t filed yet for 2019, your 2018 tax returns will be used.

If you qualify for the payment based on your 2018 return, but not your 2019 return, you may want to hold off on filing 2019 because you may be able to receive the payment. From what they’re saying economic impact payments will not be clawed back if people don’t qualify based on their final 2020 taxes.

So let’s look at a few of hypothetical scenarios:

Example 1: A couple files taxes married filing jointly and has 2 children under 10 years of age. They make $140,000 in income. They would get $2,400 for filing jointly as a couple, and then $500 for each child, for a total of $3,400.

Example 2: A couple files taxes married filing jointly and has one child 14 years of age, and one 17 years of age. They make $70,000 in income. They would get $2,400 for filing jointly as a couple, $500 for the 14 year old child, and nothing for the 17 year old since they are over 16 years old. They would receive a total of $2,900.

Example 3: An individual files taxes as a single person and has no children. They make $92,000 in income. They would get a reduced stimulus payment since their income is $17,000 over the $75,000 threshold, but under the $99,000 cutoff. The individual would receive a total of $350. ($1,200-$850 reduction).

Example 4: A couple files taxes married filing jointly and has one child 17 years of age, and one at 21 years of age. Both are still claimed as dependents. The couple makes $199,000 in income. They would get $0 for filing jointly as a couple since they’re over the income phaseout limit, and then $0 for the children since they’re both over 16 years of age. The two children cannot claim their own individual stimulus payment either since they are claimed as dependents on their parents tax returns. The entire family would receive no stimulus payment.

There are a thousand different possible scenarios. The key is to figure out where you fall with your adjusted gross income as an individual or family, calculate if you can claim your kids for the extra $500 based on their age.

For a more in depth discussion of who is and isn’t eligible, please see our full post on the 2020 stimulus check.

Is There Going To Be A Second Stimulus Check For 2020?

On or around April 15th the economic impact payments included as part of phase three of the coronavirus aid packages started to be deposited into taxpayer accounts. Here’s one from another publisher below.

Checks will start to go out in following weeks, with checks going to those with lower income first.

Ever since the CARES Act passed and was signed into law on March 27th, there has been quite a bit of talk that one round of stimulus payments for individuals and business might not be enough.

From the Wall Street Journal:

As lawmakers last week completed a record-shattering economic-rescue package estimated at $2 trillion, Senate Minority Leader Chuck Schumer (D., N.Y.) predicted: “This is certainly not the end of our work here in Congress—rather the end of the beginning.”

Legislators from both parties, administration officials, economists, think tanks and lobbyists are already roughing out the contours of yet another emergency-spending package—perhaps larger than the last—to try to keep the coronavirus crisis from turning into a 21st-century Great Depression. Many expect the debate to begin in earnest by late April.

The article talks about how in the week after the phase 3 stimulus package was passed, that they were already talking about extending the stimulus/aid package into a phase 4 aid package. Among the things they floated that they’d like to include:

• More money to shore up state government budgets.
• Extension of unemployment benefits from the phase 3 package to make the benefits last even longer.
• Funds to increase testing and supplies for testing and other healthcare spending.
• Plugging holes in the phase 3 bill (Giving benefits to those who should have received them but didn’t).
• Hazard pay for essential workers.
• Possible additional stimulus payments.

All of this is hypothetical at this stage, and lawmakers made clear that they want to give the phase 3 plan time to work so that they know better what type of additional measures might be necessary to give our economy a boost.

One question hanging over what is already being called “Phase Four” is whether that spirit of urgency and compromise can continue as the downturn advances. Or, will Washington return to the polarization that has often paralyzed Congress in recent years—especially as the November elections erode incentives for cross-party cooperation?

Another concern: Legislating amid travel restrictions and the risk that more in Congress come down with the disease.

Policy makers and economists will need to assess in coming weeks whether the most recent package does enough to tide over companies and workers through the end of the shutdown—whenever that occurs—or whether prolonged closures require another dosage of the same medicine.

President Trump has mentioned that they are now considering a second round of stimulus payments. Congressional leaders and President Trump have stated publicly that another recovery package might be necessary.

Even before Americans get to cash in their stimulus payments, President Donald Trump is floating the idea of a second round. At Monday’s news briefing, Trump said a second set of direct payments is under consideration to help blunt the economic impact of the coronavirus pandemic.

“We could very well do a second round,” Trump said. “It is absolutely under serious consideration.”

In a later tweet Trump signaled something else for phase 4.

In a tweet, Trump said infrastructure should be the focal point of the phase-four stimulus package. Aid to healthcare and broadband infrastructure will likely get bipartisan support in Congress, according to The Hill.

House Speaker Pelosi has said she would like direct payments to be a part of a second round.

Pelosi has said that another stimulus should include a second round of direct payments. This month, many Americans taxpayers received stimulus checks of up to $1,200 for single filers and up to $2,400 for married couples. But many congressional Democrats have said that the $1,200 check, which barely covers what the average American spends on rent and utilities, doesn’t go far enough. Pelosi’s plan would also give more aid to states, cities, small businesses, health systems, and first responders, Politico reported. ABC News reported that Pelosi hoped to bring the phase-four stimulus package to the House floor in late April.

At this point both Democrats and Republicans have brought measures to Congress to supply an additional $250 billion in small business funding to shore up measures from phase 3, but both competing measures have failed.

Possible Second Round Of Stimulus Checks

This past week we have seen several competing proposals for additional stimulus payments in Congress.

• A group of 62 members of Congress, Senator Kamala Harris, Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez among them, have urged Senate and House leaders to make the stimulus payments a monthly occurrence.
• Representatives Ro Khanna and Tim Ryan, Democrats from California and Ohio respectively, have proposed recurring stimulus payments of $2,000 per month for at least 6 months, along with $500 per child up to 3 children. To be eligible you would have to earn less than $130,000 as a single filer, or $260,000 as a married couple. Taxpayers 16 and older would be eligible.
• Republican Senator Josh Hawley has proposed the federal government cover 80% of wages for workers at any U.S. business up to the national median wage, until the crisis ends.
• Senate Democrats have proposed a “heroes fund” to give a $25,000 pay increase to so called “essential workers”, health care workers, grocery clerks and delivery drivers among others. They also proposed a $15,000 bonus to recruit new essential workers.

At this point the very earliest we would likely see details of any concrete phase 4 plan would be after Congress returns to the Capitol on May 4th.

So for now, take advantage of your stimulus check from the first round, and stay tuned for details on a phase 4 stimulus package.

We’ll update here as to what ends up passing (if anything), and let everyone know if there will be additional direct stimulus payments to taxpayers.

In the meantime, what would you do with the money if you received a second stimulus check? Have you received the first stimulus yet? Tell us in the comments.

Create Your Own Income Stimulus Package

While we’re waiting to hear about whether there is going to be another stimulus, it might not be a bad idea to start creating your own stimulus package of sorts. Every little bit of income helps right now.

Here’s a few posts that talk about ways to make some extra money in the midst of the downturn.

Source: biblemoneymatters.com