Your questions, answered: Everything About the $1,200 Covid-19 Stimulus Checks

Chang Fu 4/16/20 / 11 minute read

Summary

As part of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) - the recently approved $2.2 trillion stimulus bill - $1,200+ stimulus checks will be sent to every individual and household in America. That’s great...but how much is it? When and how do you get it? And what’s the catch? We answer all this and more by combing through the CARES Act Section B Section 2101 and the IRS website.

Breaking News: Track the status of your IRS stimulus check payment. In addition, the IRS just updated their page to allow non-filers to submit payment information for receiving the COVID stimulus check. The web portal for filers to submit payment information to receive the check will be out in mid-April. In addition, according to a recent tweet by the IRS on April 11th, $1,200+ stimulus money is starting to arrive in bank accounts. Many of our customers are receiving the stimulus money in their bank accounts!

The “2020 recovery rebate” or COVID $1,200+ stimulus checks

The CARES Act includes about $300 billion of payments to the average American person. The official name for these payments is “2020 recovery rebates” based on Section 2101 of the CARES Act. This recovery rebate comes at an important time as folks are losing jobs and feeling financial hardship due to the coronavirus pandemic in the US.

The coronavirus pandemic has seen cases grow like wildfire in many states in the US and unemployment is rising quickly. A recent Washington Post article mentions unemployment rates could go to almost 25% with 20 million and more Americans without a job - numbers not seen since the Great Depression. Therefore, the federal government wants to get money into the hands of average Americans as quickly as possible.

How much is the COVID-19 stimulus check?

Here’s how much folks will receive:

• Individual tax filers receive $1,200
• Married couples filing jointly receive $2,400
• $500 additional for each child

Income and other limitations for the $1,200+ stimulus check

Below are the income limitations for the $1,200 and $2,400 stimulus check:

• Individual tax filers with adjusted gross income (AGI) up to $75,000 will receive $1,200. The stimulus check amount is reduced by $5 for each $100 above the $75,000 in AGI and completely phases out at $99,000.
• Joint tax filers with adjusted gross income (AGI) up to $150,000 will receive $2,400. The stimulus check amount is reduced by $5 for each $100 above the $150,000 in AGI and completely phases out at $198,000.
• Heads of households with adjusted gross income (AGI) up to $112,500 will receive $1,200. The stimulus check amount is reduced by $5 for each $100 above the $112,500 and completely phases out at $136,500.

Note: You can find your adjusted gross income (AGI), sometimes referred to as “gross income” on your IRS Form 1040 - it includes wages, alimony, capital gains, business income, etc. minus certain payments such as student loan payments or contributions to a traditional IRA or health savings account.

Example: Bob is married to Sally and they have one kid who is 8 years old. Bob and Sally file a joint tax return as a married couple. Bob and Sally’s combined adjusted gross income (AGI) on their 2019 tax return is $160,000. Bob and Sally will receive ($2,400 minus $500 (reduction for high income earners) plus $500 (one dependent child under 17 years old) = $2,400 stimulus check.

Are you a parent? Lucky you (or maybe not in other ways)! You’ll receive $500 additional per dependent child under the age of 17, with no adjusted gross income (AGI) limitations.

So who doesn’t qualify for the $1,200+ stimulus check?

• Non-resident aliens. A commonly used IRS term, it’s basically someone who is not a US Citizen or US National who has not passed the green card test or substantial presence test.
• A dependent on someone else’s tax return. If someone else claims you as a dependent on their tax return, you will not qualify for the stimulus check.
• Those who don’t have a Social Security Number (SSN) or a Tax ID Number (TIN).

When will the COVID-19 stimulus check money arrive?

The latest IRS information (updated as of April 1, 2020) states that distribution of economic impact payments (ie. stimulus checks) will begin in the next 3 weeks with no action required for most people.

Recently, the House Ways and Means Committee released a memo, detailing that the stimulus check distribution may work like the below:

• Week of April 13th - 60 million payments are distributed via direct deposit
• Week of May 4th - paper stimulus checks are starting to be distributed by mail
• Each week thereafter - 5 million more paper stimulus checks distributed by mail each week

Common questions on the COVID-19 stimulus check

I typically don’t file tax returns. Will I receive money from this stimulus bill?

Yes, the IRS will use information from Form SSA-1099 and Form RRB-1099 to generate the stimulus payments for those that weren't required to file or did not file a 2018 or 2019 tax return.

What tax return will be used to calculate my adjusted gross income (AGI)?

The IRS will use your 2018 AGI to calculate the stimulus payment amount unless you have filed your 2019 tax return. If you have filed your 2019 tax return, the IRS will use the AGI on your 2019 tax return.

Does the stimulus check have to be repaid and is it taxable?

No, the stimulus check is considered a tax credit and does not need to be repaid. You will not be taxed on the stimulus check either.

What if the IRS doesn’t have my latest direct deposit information?

The IRS will be using the direct deposit information on your latest tax return, whether 2018 or 2019, to send you the stimulus check payment.

My address has changed. How do I make sure I receive my check?

We recommend you file an address change with USPS as soon as possible.

What if I owe back taxes and child support?

Even if you owe back taxes, you’ll still qualify for the $1,200+ stimulus check. However, if you owe child support, your stimulus check will shrink or go away altogether.

Can I qualify if my 2020 adjusted gross income (AGI) is low but my 2019 AGI is high?

Yes, although you won’t get the stimulus check right now. You will be able to claim it as a tax credit when you do your 2020 tax return.

How to protect yourself against COVID-19 stimulus check scams

1. The Federal Trade Commission (FTC) says that no one from the government will call or email and ask for your social security number (SSN), bank account number or credit card number.
2. The Federal Deposit Insurance Corporation sent out a similar warning.
3. There are no fees for getting the stimulus check from the government.

Here are some best practices on protecting yourself from scams:

• Keep sensitive personal and financial data private.
• Be skeptical about calls and emails from people you don't know.
• Contact the agency directly by going to the official website.

Other COVID-19 financial support and help

Check out our comprehensive resource list for coronavirus (COVID-19) financial support and assistance.