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Still Don't Have Your Stimulus Check? Here Are the 5 Likeliest Reasons Why

By Sean Williams - May 17, 2020 at 5:51AM

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More than 20 million Americans still haven't received their stimulus money.

Three months ago, the coronavirus disease 2019 (COVID-19) was hardly on the radar for most Americans. Today, it's completely upended the largest economy in the world, displacing more than 20 million workers and unceremoniously ending the longest economic expansion in U.S. history.

With no clear-cut end in sight to this pandemic, Congress passed and the president signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27. At $2.2 trillion, the CARES Act is the biggest relief package ever signed into law on Capitol Hill.

Among the many purposes of the CARES Act, it directed $500 billion to distressed industries and nearly $350 billion to small business loans, gave $100 billion to hospitals, and set aside $260 billion to expand the unemployment benefits program (i.e., the extra $600 per week through the end of July 2020). But what folks can most relate to is the $300 billion apportioned for direct payouts to workers and seniors.

Uncle Sam reaching his arm out of a mailbox to hand out a fanned pile of cash.

Image source: Getty Images.

Over 150 million Americans are eligible for an Economic Impact Payment

According to Treasury Department estimates, more than 150 million people are expected to be eligible for an Economic Impact Payment, as these stimulus payouts are officially known. Eligibility is being determined by a combination of adjusted gross income (AGI) on a tax filer's most recent federal return, their tax filing status, and their citizenship.

For example, single, married filing jointly, and head-of-household tax filers can receive the maximum Economic Impact Payment if their AGIs are respectively below $75,000, $150,000, and $112,500. This would lead to $1,200 payments to individuals and $2,400 payouts to couples. Additionally, qualifying dependent children aged 16 and under can add $500 per child to the amount a parent or household receives.

On the other end of the spectrum, single, married, and head-of-household filers making more than $99,000, $198,000, and $136,500, respectively, in AGI aren't eligible for any payout. Folks whose AGIs fall in-between these upper and lower bounds can expect to receive a reduced payout to the tune of $5 removed for every $100 in AGI above the lower bound.

Other disqualifying factors include being a dependent aged 17 and older, as well as being a non-citizen without a Social Security number and a legal pathway to citizenship.

Still waiting on your stimulus check? Here's the likely holdup

Thus far, close to 130 million Economic Impact Payments have been disbursed, including 110 million direct deposits and roughly 20 million paper checks. However this still leaves more than 20 million eligible recipients wondering, "Where's my stimulus money?" If you're among them, one of the following five scenarios likely describes why you're still waiting.

A frustrated woman with both of her hands on her head as she reads material on her laptop.

Image source: Getty Images.

1. Your payout was sent to a temporary bank account set up by a tax-prep service

If I had to choose the likeliest reason why a majority of eligible recipients still don't have their money, it would be because they used a tax-preparation service in 2018 and/or 2019. If you've used a tax-prep service and been owed a refund from the federal government, these services often set up a temporary account where that refund will first land. This temporary account allows the tax-prep service to remove any fees and interest you might owe. It then forwards the remaining balance to your bank account.

In theory, these temporary accounts work very well... until there's stimulus money to hand out. Back in 2008, stimulus payouts for approximately 20 million Americans wound up in these temporary accounts, which eventually meant the federal government had to issue paper checks by snail mail to those impacted. While do-it-yourself tax-prep software has made life easier for taxpayers since 2008, I'd contend that there are still millions of Americans whose payouts likely are in a temporary account.

2. You're receiving a paper check

Another reason for the delay is that you're receiving a paper check. The Internal Revenue Service (IRS) didn't even begin mailing out paper checks until recently, and the agency's check-printing capacity is constrained to about 5 million per week.

Furthermore, the way the IRS plans to dole out paper checks is from the bottom up, at least in terms of income. This means those folks with AGIs of up to $10,000 will have their paper checks mailed first, followed by those with AGIs of up to $20,000, then $30,000, and so on. If you're a middle-income or upper-middle-income individual or couple who qualified for an Economic Impact Payment, you could be waiting until June or even later to receive your paper check.

Also note that it can take up to two weeks to receive your paper check once it's been issued.

A crumpled up tax form on a table, with a person preparing their taxes in the background.

Image source: Getty Images.

3. You filed a paper tax return

A third possibility for the delay in receiving your stimulus money is due to having filed a paper tax return for the 2019 tax year.

For the 2018 tax year, around 89% of all taxpayers chose to electronically file their federal return. That's a lot. However, it still meant that more than 17 million taxpayers chose to print out their tax return and mail it in.

Normally, this wouldn't be an issue. But because of the coronavirus pandemic, the IRS stopped processing paper returns in March. It's unclear when paper-return processing will be completely back to normal, which could delay your receipt of a stimulus check.

4. The wrong bank account info is on file with the IRS

A fourth reason you could be waiting on your Economic Impact Payment is due to the wrong bank account information being on file with the IRS.

Even though a smaller percentage of Americans than ever are choosing to switch banks, we're still talking about millions of Americans making the move to a new bank or credit union each year. If you're one of those people who made the move to a new bank since last receiving a direct deposit federal tax refund, the attempt to pay you via direct deposit at your now-closed account would have bounced back as unsuccessful. In such a case, the IRS will be forced to issue a paper check, thereby delaying receipt of your payout for weeks or potentially months.

As one last note, the IRS deadline to update your bank account information online via the Get My Payment tool for direct deposit hit this past Wednesday, May 13, at noon EDT. This means if your bank account info is/was wrong, you're stuck waiting for a paper check.

A visibly surprised senior man tightly clutching his piggy bank as outstretched hands reach for it.

Image source: Getty Images.

5. It's been seized by your bank or a collection agency

Fifth and finally, your stimulus money may have been gobbled up by your bank or a creditor the moment it hit your account.

The language of the CARES Act specifically disallows federal and state collection agencies from targeting Economic Impact Payments. This is why people who owe federal back taxes or are in arrears on student loan debt are still receiving their stimulus money.

However, it doesn't provide those same parameters for private collection agencies, such as a bank, credit union, or collection agency. If, for instance, you have a negative account balance at your bank or you've fallen more than three months behind on a credit card bill or mortgage payment, your bank could seize your stimulus payout to offset your outstanding debts.

For what it's worth, the nation's four-largest financial institutions -- Bank of America, Wells Fargo, Citigroup, and JPMorgan Chase -- have pledged not to use your stimulus money to offset outstanding debts. Additionally, certain states have taken action to prevent the seizure of stimulus payouts by collection agencies. You'll need to check with the rules governing your state to see if your payout is protected from seizure.

Sean Williams owns shares of Bank of America. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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