Last month, Congress passed a massive $2.2 trillion ($2,200,000,000,000) stimulus bill, enough for over $6,000 per person according to population estimates, but the maximum an individual will receive is $1,200. Things look like they are moving forward to start distributing direct deposits for qualifying individuals and families. You’ll also get $500 for each dependent child under 17 years old. You can get info from the IRS website, and I found a great article about qualifying dependents on TaxSlayer.
So how much should you expect to get?
- $1,200 for single, or married filing separately, tax filers with an adjusted gross income of $75,000 or less
- $1,200 for those that file taxes as head of household tax filers with an adjusted gross income of $112,500 or less
- $2,400 for married couples filing taxes jointly and have an adjusted gross income of $150,000
If you have an adjusted gross income more than the above amounts, you’ll receive a lower stimulus check or none at all. The stimulus check amounts will be phased down from $1,200 to $0 for higher earners. There will be $5 less in a stimulus check for every $100 in adjusted gross income above the designated amounts above. You will NOT receive a stimulus check if your adjusted gross income is above the following levels:
- $99,000 for tax filers that file as single or married filing separately
- $136,500 for tax filers filing as head of household
- $198,000 for those married filing jointly
If you have any questions about what your Adjusted Gross Income (AGI) is, check the IRS website or ‘Line 7’ of your Form 1040.
If you are not required to file a tax return, the IRS has set up a portal to provide them necessary information so that you can receive your stimulus check.
Now that we’ve covered who will get a stimulus check and how much, let’s go over what you should do with your stimulus check. If your income has been disrupted by the COVID-19 shutdown, you should be using that money as you need for essentials: food, utilities, rent/mortgage, gas, medication, and any other needs. None of us know exactly when things will get back to ‘normal,’ so you shouldn’t be spending the stimulus check on wants like clothes, new electronics (unless you need it for school or work), or any other random unnecessary items you may find online. Avoid the temptation of online shopping, especially with the uncertainty surrounding how the COVID-19 pandemic will continue going forward.
If you have been able to keep your income, good for you and your family. You can definitely look to put some money back into the economy, but let me ask a couple questions before you go on a spending spree.
- Did you max out your IRA contributions for 2019? The limit was $6,000 for people under 50, and $7,000 for people 50 and older. If not, you should definitely be contributing to your retirement accounts. With the extended tax filing deadline, which is now July 15, 2020, for the 2019 tax year, you have extra time to make IRA contributions that go towards the 2019 tax year.
- Do you have any personal debts at a higher interest rate, especially credit card debt? If so, you should probably put your entire stimulus check towards lowering and paying off that debt. In a sense, you already put the stimulus money into the economy before this all happened (and some extra with the interest costs), and now is a good time to stop paying 10%, 15%, 20%, or more on some of your credit card debt.
If you’re getting a stimulus check, I hope you find productive ways to spend or save it.
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