Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More


  • 500 Club

    I ask everyone if we can please not debate this politically. I’m just posting for the actual financial ramifications to each one of us. If any of the details mentioned in the post are wrong, please correct in the comments below, preferably with the source.

    The US Senate agreed to a bipartisan $2 trillion stimulus deal. It just passed the House on 4/27 and President Trump is expected to sign it quickly.

    Direct Link to stimulus Senate bill (pdf)

    [This article has been updated many times. Last update 3/27/20 at 12:05 pm ET.]

    $1,200 Checks

    The part that people are most interested in that the government will mailing out checks of $1,200 to most US residents.

    Individuals (non-dependent) will get between $1,200; couples get $2,400 (total)
    Additionally, you’ll get $500 per child age 16 and under. For example, a couple with two children can get up to $3,400. There’s no limit on how much a large family can get. For example, a couple with five children will get $4,900.
    Calculator from the Washington Post here.
    Adult dependents are not eligible. Sounds like neither the dependent or the ‘caregiver’ will get a check for an adult dependent.
    Even those who didn’t earn anything and those on Social Security will get these payments. In the event of someone who never filed a tax return it might be hard for the government to find you, though.
    The only exception is those who earn more than $99,000 per year ($198,000 for a couple) who will not get anything. “Income” is defined as AGI, adjusted gross income.
    There’s a phase-out from $75,000 – $99,999 where you’ll get a smaller check. (math calculation here)
    The $75,000 threshold = $150,000 for a couple filing jointly ($112,500 for a head-of-household). Note those with children has a higher phase-out level and will still get some smaller amount even above the $75,000/$150,000 threshold. I don’t know what the exact math is, you can consult this calculator.
    Green card holders/permanent residents (“resident aliens”) will receive the stimulus checks. I don’t know if US Citizens living abroad will get this payment.
    The government will use your 2019 tax return to decide if you are eligible. They will only go to your 2018 tax return if you have not filed in 2019. They, reportedly, will NOT claw back if it turns out you made more in 2020 than in 2019/2018. They WILL pay you back if you end up making less in 2020 – they’ll reimburse you based on your 2020 income. (More discussion in this dedicated post.)
    This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.
    The stimulus money will go to wherever your last federal tax refund went; if you got a check you’ll get a check, if you got a direct deposit (authorized after January 1, 2018) it’ll be sent to that bank. Those getting electronic payments can see them within weeks while those getting checks will take longer. They are also considering sending out prepaid debit cards instead of checks. They government will also send out letters to your address indicating that they’ve sent out a payment. You can change your address using this form (though it’ll take a number of weeks to process).

    Additional Details

    Adult dependents are not eligible. Neither the dependent nor the ‘caregiver’ will get a check for an adult dependent.
    Those age 17 and up can get their own stimulus check if they are not claimed as a dependent by someone else. (If they file their own tax return, the government will know about them and send them a check. You can file a return even with $0 income.)
    Those with children has a higher phase-out level with an extra $10,000 per child, e.g. couple with 2 children phase out to $0 at the $218,000 income mark. You can consult this calculator to do the math for your own situation.
    Even those who didn’t earn anything and those on Social Security will get these payments. In the event of someone who never filed a tax return it might be hard for the government to find you, though.
    Green card holders/permanent residents (“resident aliens”) will receive the stimulus checks.
    US Citizens living abroad will also get this payment, according to reports I’ve seen.
    The government will use your 2019 tax return to decide if you are eligible. They will only go to your 2018 tax return if you have not filed in 2019. They, reportedly, will NOT claw back if it turns out you made more in 2020 than in 2019/2018. They WILL pay you back if you end up making less in 2020 – they’ll reimburse you based on your 2020 income. (More discussion in this dedicated post.)
    The stimulus money will go to wherever your last federal tax refund went; if you got a check you’ll get a check, if you got a direct deposit (authorized after January 1, 2018) it’ll be sent to that bank. Those getting electronic payments can see them within weeks while those getting checks will take longer. They are also considering sending out prepaid debit cards instead of checks. They government will also send out letters to your address indicating that they’ve sent out a payment.
    You can change your address using this form, though it’ll take a number of weeks to process. You can also try calling the IRS at 800-829-1040, M – F, 7 a.m. – 7 p.m. to try changing your direct deposit info.
    There’s also supposed to be a web portal that’ll go live eventually where people can add their direct deposit info if they don’t already have it on file.

    Unemployment Benefits

    Another big component is the expansion of unemployment benefits. The increased benefits include:

    Provides enhanced unemployment benefits through July 31, 2020. This increases your unemployment check by $600/week, on top of what the state regularly gives, for 4 months.
    Someone can potentially get their full salary amount after being fired, with no ‘pay cut’, depending on what your salary was.
    Extends unemployment 13 weeks longer than usual rules. Most states offer 26 weeks, and that will now be 39 weeks. This continues through December 31, 2020.
    Extends unemployment to self-employed workers as well. That would include gig workers like Uber drivers. (I assume these workers will file for unemployment through the regular state unemployment website/office, but I’m not certain of this.)
    Extends unemployment to furloughed employees as well. The added goal here is that businesses should not fire employees, instead leave them on as furloughed.

    Some other enhancements to unemployment coverage with the new bill:

    The bill removes the ‘waiting week’ provision to allow unemployed workers to get benefits immediately.
    Part time workers who are laid off are now eligible for unemployment.
    Those who did not work long enough and are laid off are eligible as well.
    Those who are sick, those who must quarantine, and those who must care for a sick family member are eligible.
    If you children’s school/day-care is shut down and that stops you from being able to go to work, you are eligible for this new unemployment benefit.
    People who are already on unemployment for reasons outside coronavirus will be eligible for the extra 13 weeks and for the extra $600 as well. People who exhausted their unemployment time limit can sign up again for the extra 13 weeks.

    Workers who are receiving paid sick leave or paid family leave would not be covered. People looking for a job who can’t find one are not covered either; it only covers those who have a job which they lost or which they temporarily can’t do their job.

    Other Enhancements

    Some other enhancements to unemployment coverage with the new bill:

    The bill removes the ‘waiting week’ provision to allow unemployed workers to get benefits immediately.
    Part time workers who are laid off are now eligible for unemployment.
    Those who did not work long enough and are laid off are eligible as well.
    Those who are sick, those who must quarantine, and those who must care for a sick family member are eligible.
    If you children’s school/day-care is shut down and that stops you from being able to go to work, you are eligible for this new unemployment benefit.
    People who are already on unemployment for reasons outside coronavirus will be eligible for the extra 13 weeks and for the extra $600 as well. People who exhausted their unemployment time limit can sign up again for the extra 13 weeks.

    Workers who are receiving paid sick leave or paid family leave would not be covered. People looking for a job who can’t find one are not covered either; it only covers those who have a job which they lost or which they temporarily can’t do their job.

    Business Benefits

    Small business loans: This fund is for loans of up to $10M to companies of 500 employees or fewer. Businesses who pledge to keep their workers can take a loan from the government, with the eventual forgiveness of the loan if they continue to pay their employees. I’m sketchy on the details here, but it sounds like you can get forgiveness on the loan for 8 weeks worth of payroll, utilities, mortgage interest, and rent costs. (I think ‘payroll’ means the payroll taxes, not the employee payments, but I’m not entirely certain.)
    Payroll tax reimbursement: Business affected by Covid-19 will get 50% of their payroll taxes paid back on up to $10,000 in wages paid during the crisis.
    Payroll tax deferment: Payroll taxes for 2020 can be deferred and paid half by December 31, 2021 and half by December 31, 2022.
    A bunch of other things I don’t fully understand so I won’t write about.

    $2T List

    Here’s a partial break-down of the $2 trillion, as best as I could find:

    $250B for direct payments/checks to individuals and families. (see above)
    $367B for small business loans. (see above)
    $250B to boost unemployment insurance benefits. (see above)
    $500B in loans for distressed companies. $75B of this is earmarked for airlines and travel.
    $130B in funding for hospitals and medical equipment.
    $150B in funding for state and local governments.

    Miscellaneous

    Allows up to $300 of charitable contribution deductions for those who do not itemize who usually can not take a charitable deduction. This could be a nice little savings for a lot of people. The way this new rule was worded implies that this is not only for 2020 but will be a permanent feature of the tax code for the coming years. Charity donations since January 1, 2020 will qualify for this deduction. (Donations must be made directly to a charity, not to a donor-advised fund. I’m uncertain if stock/property donations work for this or if it’s limited to cash donations.)
    A less relevant change is that, for 2020, those who itemize can get up to 100% of your income deducted through charitable donations; typically the limit is 50%.
    Most federal student loans borrowers will have payments and interest deferred until September 30. (Also, for popular loan forgiveness programs, like PSLF, borrowers will get credit for payments during deferment period.)
    Certain coronavirus-related costs can be withdrawn from retirement fund without 10% early withdrawal penalty, up to $100,000. You can also borrow up to $100,000 from your 401k for reasons related to the pandemic.
    Those at an age who are required to take a minimum distribution from their retirement account will not have to do so this year.
    Stimulus Bill Forbids Credit Agencies From Issuing Negative Marks For Certain Deferred Payments

    Information is still breaking, I tried my best to break it down in this post. Please add anything missing or corrections in the comments below.

    Source and Credit to: DoC


  • Global Moderator

    I’ve heard that the $600 - $1,200 individual “checks” will automatically be distributed via direct deposit if you’ve received federal tax refunds via direct deposit. Let’s hope those accounts are still active//in good standing.

    ETA: student loan bills (interest and principal) will be suspended for 2 months


  • administrators

    So for small businesses all they get is a loan? A lot of them had to shut down with the rents still being due. So lets say they get the loan to pay the rent while making $0, and if and when they reopen, they have to pay back the loan (is it interest free?) out of their already thin profits. I see a lot of small business closures in the future.



  • dangeRuss, it’s not a perfect solution, but it will help. For example, when my husband and I get the checks (we’re struggling on SS), we plan to spend some of it for things we haven’t been able to afford. One will be to get the driveway graveled, which it hasn’t been for several years and is a muddy track. That will pass some money on to a local gravel company which will be able to pay for gas and a driver to bring the gravel to us. We plan to spend some to hire a small-job carpenter to fix the shed double doors and to build a cover over that part of the shed. So that much of the money will help the carpenter pay for gas and food and rent or mortgage. When the average person spends the money, it will put it back into circulation, and those that receive it will spend it too, rinse, repeat. When Big Business gets the money, they use it to buy back stock and pay bonuses to top-level executives, taking the money out of circulation (well, except for luxury car manufacturers, high-end resorts and hotels, vacations at exclusive locations, designer bespoke clothes, etc.)


  • 500 Club

    @dangeruss said in US Stimulus: Government To Mail Out $600-$1,200 Checks To Most US Residents; Unemployment Expansion & More:

    So for small businesses all they get is a loan? A lot of them had to shut down with the rents still being due. So lets say they get the loan to pay the rent while making $0, and if and when they reopen, they have to pay back the loan (is it interest free?) out of their already thin profits. I see a lot of small business closures in the future.

    Actually, the deal includes loan forgiveness for small businesses that keep their employees on the payroll.


  • administrators

    @dionaea That’s assuming that the gravel company is still working. Under lockdown, all nonessential businesses have had to close, and I’m not sure gravel falls under essential.


  • 500 Club

    @dangeruss re: Small Business Loans
    The Small Business Administration’s 7(a) loan program is expanded more than tenfold. The legislation authorizes $349 billion in lending from February 15th to June 30th for businesses with fewer than 500 employees. Recipients could receive up to $10 million of 250% of their monthly payroll costs and would be expected to use the funds to retain workers, maintain payroll, and continue to pay monthly expenses.

    Recipients of these loans could also apply for loan forgiveness that would forgive an amount up to eight weeks of payroll and other fixed expenses such as rent and utilities.


  • 500 Club

    @fivetalents said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:

    I’ve heard that the $600 - $1,200 individual “checks” will automatically be distributed via direct deposit if you’ve received federal tax refunds via direct deposit. Let’s hope those accounts are still active//in good standing.

    ETA: student loan bills (interest and principal) will be suspended for 2 months

    In an earliet draft of the bill it was $600 - $1,200 checks, but in the draft that passed the check amount is $1,200 (no more $600 checks). The only exception is those who earn more than $99,000 per year ($198,000 for a couple) who will not get anything. “Income” is defined as AGI, adjusted gross income. There’s a phase-out from $75,000 – $99,999 where you’ll get a smaller check.


  • 10K Club

    Will they tax us on the $1,200 ?


  • 500 Club

    @ctgolfer said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:

    Will they tax us on the $1,200 ?

    The $1,200 checks are treated as a refundable tax credit and thus not considered taxable income.

    I know it was a lot to read in the OP, but it did talk about that under the “$1,200 Checks” section towards the end:

    This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.


  • 10K Club

    @mrvietnam said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:

    @ctgolfer said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:

    Will they tax us on the $1,200 ?

    I know it was a lot to read in the OP, but it did talk about that under the “$1,200 Checks” section towards the end:

    This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.

    Thanks MrVietnam, I did miss that. Blurry eyed buzz happening right now. Some good stuff I be smokin’.


  • Global Moderator

    Thanks OP.

    I do want to note that there are some adults who will not receive a check: dependents. Mostly younger adults (college kids, for example) and elderly parents who are dependent upon their children.

    There are also some ‘donut hole’ children who won’t qualify for the $500 check most likely. I have a son who was 17 last year and turns 18 this year - the 2018 tax act redefined children (for Child Tax Credit purposes, which is what it appears will be used to define children for stimulus payments) as those 16 and younger. As such, he probably will not qualify for a $500 stimulus credit.


  • 500 Club

    @orthros said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:

    Thanks OP.

    I do want to note that there are some adults who will not receive a check: dependents. Mostly younger adults (college kids, for example) and elderly parents who are dependent upon their children.

    There are also some ‘donut hole’ children who won’t qualify for the $500 check most likely. I have a son who was 17 last year and turns 18 this year - the 2018 tax act redefined children (for Child Tax Credit purposes, which is what it appears will be used to define children for stimulus payments) as those 16 and younger. As such, he probably will not qualify for a $500 stimulus credit.

    Thanks for those clarifications.


  • Global Moderator

    The IRS plans to add a link on their website soon that will allow anyone, who hasn’t already done so, to submit their bank account info (so they can receive their stimulus checks via direct deposit instead of postal mail).



  • @dangeruss said in Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More:

    @dionaea That’s assuming that the gravel company is still working. Under lockdown, all nonessential businesses have had to close, and I’m not sure gravel falls under essential.

    dangeruss, I wasn’t talking about getting gravel while this mess is ongoing. Gravel is definitely not an essential item unless your home was destroyed at the time the tornadoes came through and you’re trying to rebuild. I’m saying that once it is safe (whenever that will be), we will try to aid some of the small local businesses here, including a local gravel company. Sorry I wasn’t clear before.


 

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