For approximately 80 million Americans, the big day likely arrived this week. Following passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, the first batch of stimulus checks hit checking or savings accounts via direct deposit this week.
The CARES Act was passed by lawmakers to help prop up a flailing economy and labor force in the wake of coronavirus disease 2019 (COVID-19). Of the nearly 2.05 million cases of COVID-19 reported worldwide, as of April 15, 31% were located in the United States. Mitigation efforts to contain the spread of the coronavirus have led to the shutdown of nonessential businesses throughout much of the country and has put almost 17 million Americans out of work in just a three-week span.
Image source: Getty Images.
The lowest-income Americans could see their stimulus payouts delayed
For many, a stimulus check is a literal means of putting food on the table or to pay bills. An April 7 survey from online loan comparison website Credible showed that "buying groceries" was the likeliest use of stimulus checks, with "pay my utilities," "pay my rent or mortgage," and "pay credit card bills" occupying four of the top five likeliest uses.
Yet for potentially millions of low-income Americans, their path to receiving a coronavirus relief check may be delayed for a very odd reason.
Following the disbursement of 80 million direct deposits, the Treasury Department will still have to cut paper checks to approximately 60 million households over the next five months. Issuing paper checks is a much slower process, so the Treasury Department has chosen to work its way from the bottom up in terms of income when disbursing these payouts.
According to a report from the Washington Post, taxpayers with up to $10,000 in adjusted gross income (AGI) will be the first to receive paper checks, with payouts expected by April 24. The following week (by May 1), taxpayers with AGIs of up to $20,000 will then begin receiving their paper stimulus checks, and so on, with those folks earning the most (but who still qualify for a coronavirus relief check) receiving their reduced payout sometime in September.
President Trump giving the State of the Union address. Image source: Official White House Photo by D. Myles Cullen.
As you can rightly imagine, these stimulus checks are especially important for low-income workers whose way of life may have been completely disrupted by COVID-19 mitigation measures. But the initial round of paper checks to the lowest-income taxpayers may be delayed because President Trump has asked for his name to be stamped in the memo section of each paper check issued.
In speaking with Yahoo! News, Chad Hooper, president of the Professional Managers Association, noted that: "[R]eprogramming historically has led to delays. Our team at IRS always works very diligently to mitigate and minimize those delays." In other words, altering and testing a new check design to include President Trump's signature in the memo section, and doing so without a fully staffed office due to social distancing measures, may push back the mailing of the first batch of "Trump stimulus checks" to the lowest-income Americans.
It should be noted that any delay would be brief and likely only impact the first batch of checks to be issued. But any delays in issuing relief checks to the lowest-income Americans can't be discounted.
Will I be receiving a stimulus check?
But the question many people are still asking is whether or not they'll be entitled to receive a Trump stimulus check -- and if so, how big the check will be.
As outlined in the CARES Act, your eligibility for a stimulus check is dependent on your AGI from your most recent tax filing. If you've filed your 2019 federal return already, that's how your eligibility will be determined. Otherwise, the IRS will use your AGI from 2018 to make the determination.
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The maximum any one individual can receive is $1,200, with single adults earning less than $75,000 in AGI netting this amount. Married couples filing jointly with less than $150,000 in AGI can expect to receive $2,400, while single parents filing as head of household will receive the full $1,200 payout if they earn under $112,500 in AGI.
Comparatively, single, married, and head-of-household filers with respective AGIs above $99,000, $198,000, and $136,500 won't be receiving a dime because they're considered high earners.
For those folks whose AGI falls in between the no-payment upper bound and the full-payment lower bound, stimulus checks will be reduced by $5 for every $100 in AGI. As an example, a single filer earning $80,000 in AGI would receive a check for $950.
And as the icing on the cake, households will also receive $500 per qualifying child aged 16 and under. Thus, a married couple with earnings less than $150,000 in AGI with two young children can expect to receive a check for $3,400.
Aside from high-income earners, most non-citizens who don't have a Social Security number are excluded from receiving a Trump stimulus check, as are dependents aged 17 or older. This includes college-age students, as well as seniors who are claimed as dependents on someone else's federal tax return.
