Note: As of 3/27/20, the CARES Act was signed into law.
The White House and Senate leaders have reached a historic deal on a massive $2 trillion economic relief package related to COVID-19. This package is designed to help both workers and businesses (small and large) and is the largest deal ever to pass through Congress.
The Senate vote sends the bill to the House which is expected to have a vote on Friday morning. President Trump said that if approved, he intends to sign it immediately. Inside the bill’s hundreds of pages are details regarding who can expect to receive checks. Let’s look at a breakdown:
Who is eligible?
As the bill states (according to lawmakers), everyone is eligible except “nonresident aliens” and those who can be used as the basis for deductions of another person. According to the Senate Finance Committee Chairman, “Seniors, veterans, the unemployed and low-income Americans would be eligible too.” It looks like those who collect Social Security will be able to collect checks as well, even if they didn’t file a tax return. The government can use information from their SSA-1099, or other retirement statements as well. With this understanding, let’s look at how much people can expect to get:
- Individual tax filers - Individual tax filers are eligible for payments up to $1,200, but this amount will decrease for those who have an adjusted gross income (AGI) of more than $75,000/year. The bill states that payments will be reduced by 5% for every dollar above that mark. This translates to $50 for every $1,000 above making $75,000/year. The amount will be reduced to $0 for those who make $99,000 or more annually.
- Joint tax filers – Couples who file their taxes jointly are eligible for a payment up to $2,400, plus an additional $500 per child. This amount will decrease for couples whose AGI is greater than $150,000 at the same rate listed above (5% of every dollar above $150,000). The amount will be reduced to $0 for joint filers without children who earn $198,000 or more.
- People filing as Head of Household - People filing Head of Household (typically single parents with children) are eligible for payments up to $1,200. Heads of household will also receive an additional $500 per child. This amount will be reduced for people with an AGI of more than $112,500 a year. Reduced checks on a sliding scale are available for heads of households earning up to $136,500.
When is the money expected to arrive?
To determine an individual or couple’s payment, income will be based on 2019 tax return filings. If you have not filed for 2019, it will be based off your 2018 tax filing. According to the bill, payments will be made via direct deposit to an account that has been authorized for tax refunds or federal payments on or after January 1st, 2018. According to several media outlets, money is likely to arrive sometime in April via direct deposit, and those getting checks mailed may take longer.
Direct deposit is a wise choice!
If you choose direct deposit, you not only get this money much faster, but it’s a lot safer! Imagine if fraudsters knew when stimulus checks would be arriving in the mail and scoured your neighborhood’s mailboxes around that time. (It’s sad to say, but even during the worst of times, fraudsters like to take advantage of these times to benefit themselves financially. This is just one of many scams that may take place during this pandemic.)
Have you filed your 2019 taxes?
If you haven’t filed your taxes yet, I would highly encourage you to do so as soon as possible. For those receiving a refund, this could be a great time to utilize the refund dollars and have extra money on hand during these tough times. For those that may owe money, the tax deadline has been extended until July 15, so you can best prepare how to cover that expense.
Right now, many families are worried about bills becoming late, and about getting food on the table for their kids and other necessary essentials. For those that are working and still able to earn a paycheck, this is a great time to take the money and put it back for other emergencies that could come in the future.
In every one of my education classes, I talk about the importance of establishing an emergency savings account. Many people agree with the “concept” but feel that this type of situation will never happen to them.
As we are looking at this global pandemic, I see this as a wake-up call to everyone that we never know what may happen outside of our control. Use this as a time to set up a plan for your future.
And remember, bankers around the country want to help you. I encourage you to set an appointment to meet with your relationship banker to find out how they can assist you in weathering any current financial challenges, as well as building a plan to help you meet future financial goals.
Facing financial hardships?
During this period of disruption, we recognize that some are facing unanticipated financial hardships. If you find yourself in this circumstance, please don’t hesitate to reach out to your local banking center or call us at 1-800-731-2265, Option 6.
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