On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. The United States swiftly responded. Individual states put a series of lockdowns in place to slow the spread, and as unemployment climbed, the federal government sprang into action. It passed relief bills that included an Economic Impact Payment -- better known as a coronavirus stimulus check.
Following the first stimulus payment, demand grew for more direct relief to American families as the pandemic raged on. In December 2020, the U.S. government again took action to provide a second stimulus check. Here's what you need to know about these direct payments, including who is eligible, how much money was available in the stimulus checks, and how to check the status of your payment.
Stimulus checks are direct payments to American families that the U.S. government provided in response to COVID-19.
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) authorized the first check. It provided up to $1,200 per eligible adult and $500 per eligible dependent child under the age of 17. The second check was authorized by a $900 billion coronavirus relief bill, which was tacked on to the Consolidated Appropriations Act of 2021. It authorized up to $600 per eligible adult and $600 per eligible dependent child under 17.
Both stimulus checks were actually advances on a refundable tax credit called the Recovery Rebate Credit. The IRS was charged with distributing the funds. While some people did receive a paper check, much of the money was actually sent via direct deposit or debit card -- even though the payments are often called stimulus checks.
Stimulus checks are available to eligible U.S. individuals with Social Security numbers. Anyone claimed as a dependent wasn't eligible. However, individuals who claimed dependents under 17 could receive a payment for them.
You'll need an income under $75,000 as a single tax filer, $112,500 as a head of household filer, or $150,000 as a married joint filer to receive the full amount. You can find out more details about how eligibility is reduced at higher income thresholds in the section below.
The IRS utilized tax return information from 2018 or 2019 to determine income. For the first round of stimulus, the agency also obtained information from the Social Security Administration and VA to send payments to benefits recipients who don't file tax returns. And it established an online form for non-filers to claim their payments.
The IRS has created a website where you can check the status of your stimulus payment.
There is a "Get my Payment" tool for both the first and second stimulus checks. Use it to confirm whether your payments were sent and see how the IRS distributed the funds.
If the Get my Payment tool shows "Payment Status #2- Not Available," you will not receive your stimulus check without filing a tax return to claim it. Unfortunately, the IRS had a short timeframe to send out the second payments, and could not distribute all the payments in time.
The amount of your stimulus checks varies depending on your family status and income.
The first stimulus check was worth up to $1,200 per eligible adult and $500 per dependent child under 17. Single adults received as much as $1,200. Married couples with no children got up to $2,400. Married couples with two children received up to $3,400.
If your income exceeds $75,000 as a single filer, $112,500 as a head of household, or $150,000 as a married joint filer, your check amount was reduced at a rate of $5 per extra $100 earned. So if you made $76,000 as a single filer, your check would be reduced by $50.
Eligibility phased out for single filers with incomes above $99,000, heads of household with incomes above $136,500, and married joint filers with incomes above $198,000 for their own payments. However, some still received dependent payments. Married joint filers with two children and $199,000 in income would lose their own $2,400 payments but receive $950 of the $1,000 in dependent payments.
The second check provided $600 per eligible adult and child dependent. The phase-out rules worked the same way. However, because the check was for a smaller amount, eligibility disappeared entirely at a lower income threshold. Singles with incomes above $87,000 received no payment. Nor did heads of household with incomes above $124,500 -- unless they received some dependent funds. And married joint filers lost eligibility for their own payments at $174,000.
There have been just two stimulus checks authorized by the U.S. government. Most of the money has already been paid or will be paid out by Jan. 15, 2021 at the latest. Here is the timeline for the distribution of the first two stimulus checks.
This is when the first stimulus check was delivered:
The timeline for the distribution of the second stimulus check was much shorter. Congress approved the coronavirus relief bill on Dec. 21, 2020 and it was signed into law on Dec. 28. The first direct deposits were made Dec. 29, and the first paper stimulus checks were put in the mail on Dec. 30.
The deadline for the IRS to provide the second check via mail, direct deposit, or debit card was Jan. 15, 2021. Anyone who hasn't received a check by Jan. 15 will have to file a tax return to get it.
The second stimulus deal took months of negotiation, and even when it passed many lawmakers still wanted to see larger stimulus checks. As such, discussions about another stimulus package are already underway.
President-elect Joe Biden is urging the passage of another relief bill. Biden's stimulus plan includes a $2,000 stimulus check. However, there are obstacles that could prevent more coronavirus aid from being signed into law quickly. Americans hoping for more money in their bank account will need to wait to see if Congress is able to pass an additional bill.
If a third stimulus check is authorized, the IRS should be able to distribute the funds quickly.
If you need your stimulus checks to pay immediate bills, this should be your first priority. If you don't need the money immediately, you can invest your stimulus check. You have a number of options for how to do that.
The best high-yield savings accounts are a good place to invest your stimulus checks if you need the money soon or want to bolster your emergency fund. Investing in a high-yield savings account makes the money accessible, avoids risk, and can earn a reasonable rate of return.
Opening a CD with your stimulus check can provide a higher interest rate than a high-yield savings account without requiring you to take on additional risk. Like savings accounts, certificates of deposit are FDIC insured. But you must be willing to allow your money to be locked up for a period of time to get the best CD rates. If you're not familiar with CDs, you can learn more about them with our guides, What Is a CD? and How Does a CD Work?
A brokerage allows you to invest in a variety of assets, including ETFs, stocks, and mutual funds. You can potentially earn larger returns by investing with one of the best online stock brokers.
However, be aware that stock market investments can go up as well as down, so you may risk losing your money. If you will need it within the next two to five years, this is probably not the best option. Short-term investing is riskier than making longer-term investments.
Opening a money market with your stimulus check is another option. Money markets are similar to savings accounts but you'll generally have easier access to your money through a debit card and/or checks. The best money market rates may be slightly lower interest rates than savings accounts. This is the trade-off you must accept for easier access to your money. However, like savings accounts and CDs, these are FDIC insured.
A stimulus check is a payment authorized by the U.S. government to help cope with the financial impact of coronavirus. The CARES Act authorized checks of up to $1,200 per adult and $500 per dependent under age 17. A subsequent relief bill provided for an additional $600 in stimulus money per eligible adult and eligible child dependent.
Despite the name, many payments were sent via direct deposit or debit card, as well as paper checks. The money was distributed by the IRS and is an advance on a tax credit.
Most Americans with Social Security numbers are eligible for coronavirus stimulus checks. However, those who file married joint returns with spouses who use ITIN numbers could not initially receive checks. Higher income Americans also saw their checks reduced or their eligibility eliminated entirely.
The full amount of the stimulus checks was available for single filers earning up to $75,000, heads of household earning up to $112,500, and married joint filers earning up to $150,000. For those earning more, the amount of the check was reduced by $5 per each extra $100.
The first coronavirus stimulus money has been distributed. Most of the second payments have also been sent to eligible Americans, and the remaining payments must be sent by Jan. 15. Anyone who did not receive the full amount due under the first or second payment will need to file a tax return to get it.
President-elect Joe Biden has proposed a plan to provide another $2,000 stimulus check, but it's not clear if it can pass Congress. There is no guarantee a third check will come.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.