Posted by Chuck on March 25, 2020
Misc

Published on March 25th, 2020 | by Chuck

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Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More

I ask everyone if we can please not debate this politically. I’m just posting for the actual financial ramifications to each one of us. If any of the details mentioned in the post are wrong, please correct in the comments below, preferably with the source.

The US Senate and House have agreed to a bipartisan $2 trillion stimulus deal. It’s expected to become law shortly.

Direct Link to stimulus Senate bill (pdf)

[This article has been updated many times. Last update 3/30/20 at 12:02 am ET.]

$1,200 Payments

The part that people are most interested in that the government will mailing out checks of $1,200 to most US residents.

  • Individuals (non-dependent) will get between $1,200; couples get $2,400 (total).
  • Additionally, you’ll get $500 per child age 16 and under. For example, a couple with two children can get up to $3,400. There’s no limit on how much a large family can get. For example, a couple with five children will get $4,900.
  • Those who earn more than $99,000 per year ($198,000 for a couple) who will not get anything. “Income” is defined as AGI, adjusted gross income. There’s a phase-out from $75,000 – $99,999 where you’ll get a smaller check. (The phase-out rate is $5 per $100 of income.)
  • The $75,000 threshold = $150,000 for a couple filing jointly = $112,500 for a head-of-household.
  • This check is not taxable, you keep all of it; you won’t have to pay taxes on it at the end of the year like you do on other income.
  • Calculator from the Washington Post here.

Additional Details

  • Adult dependents are not eligible. Neither the dependent nor the ‘caregiver’ will get a check for an adult dependent.
  • Those age 17 and up can get their own stimulus check if they are not claimed as a dependent by someone else. (If they file their own tax return, the government will know about them and send them a check. You can file a return even with $0 income.)
  • Those with children has a higher phase-out level with an extra $10,000 per child, e.g. couple with 2 children phase out to $0 at the $218,000 income mark. You can consult this calculator to do the math for your own situation.
  • Even those who didn’t earn anything and those on Social Security will get these payments. In the event of someone who never filed a tax return it might be hard for the government to find you, though.
  • Green card holders/permanent residents (“resident aliens”) will receive the stimulus checks.
  • US Citizens living abroad will also get this payment, according to reports I’ve seen.
  • The government will use your 2019 tax return to decide if you are eligible. They will only go to your 2018 tax return if you have not filed in 2019. They, reportedly, will NOT claw back if it turns out you made more in 2020 than in 2019/2018. They WILL pay you back if you end up making less in 2020 – they’ll reimburse you based on your 2020 income. (More discussion in this dedicated post.)
  • The stimulus money will go to wherever your last federal tax refund went; if you got a check you’ll get a check, if you got a direct deposit (authorized after January 1, 2018) it’ll be sent to that bank. Those getting electronic payments can see them within weeks while those getting checks will take longer. They are also considering sending out prepaid debit cards instead of checks. They government will also send out letters to your address indicating that they’ve sent out a payment.
    • You can change your address using this form, though it’ll take a number of weeks to process. You can also try calling the IRS at 800-829-1040, M – F, 7 a.m. – 7 p.m. to try changing your direct deposit info.
    • There’s also supposed to be a web portal that’ll go live eventually where people can add their direct deposit info if they don’t already have it on file.

Unemployment Benefits

Another big component is the expansion of unemployment benefits. The increased benefits include:

  • Provides enhanced unemployment benefits through July 31, 2020. This increases your unemployment check by $600/week, on top of what the state regularly gives, for 4 months. (Someone can potentially get their full salary amount after being fired, with no ‘pay cut’, depending on what your salary was.)
  • Extends unemployment 13 weeks longer than usual rules. Most states offer 26 weeks, and that will now be 39 weeks. This continues through December 31, 2020.
  • Extends unemployment to self-employed workers as well. That would include gig workers like Uber drivers. (I assume these workers will file for unemployment through the regular state unemployment website/office, but I’m not certain of this.)
  • Extends unemployment to furloughed employees as well. The added goal here is that businesses should not fire employees, instead leave them on as furloughed.

Other Enhancements

Some other enhancements to unemployment coverage with the new bill:

  • The bill removes the ‘waiting week’ provision to allow unemployed workers to get benefits immediately.
  • Part time workers who are laid off are now eligible for unemployment.
  • Those who did not work long enough and are laid off are eligible as well.
  • Those who are sick, those who must quarantine, and those who must care for a sick family member are eligible.
  • If you children’s school/day-care is shut down and that stops you from being able to go to work, you are eligible for this new unemployment benefit.
  • People who are already on unemployment for reasons outside coronavirus will be eligible for the extra 13 weeks and for the extra $600 as well. People who exhausted their unemployment time limit can sign up again for the extra 13 weeks.

Workers who are receiving paid sick leave or paid family leave would not be covered. People looking for a job who can’t find one are not covered either; it only covers those who have a job which they lost or which they temporarily can’t do their job.

Business Benefits

  • Small business loans: This fund is for loans of up to $10M to companies of 500 employees or fewer. Businesses who pledge to keep their workers can take a loan from the government, with the eventual forgiveness of the loan if they continue to pay their employees. I’m sketchy on the details here, but it sounds like you can get forgiveness on the loan for 8 weeks worth of payroll, utilities, mortgage interest, and rent costs. (I think ‘payroll’ means the payroll taxes, not the employee payments, but I’m not entirely certain.)
  • Payroll tax reimbursement: Business affected by Covid-19 will get 50% of their payroll taxes paid back on up to $10,000 in wages paid during the crisis.
  • Payroll tax deferment: Payroll taxes for 2020 can be deferred and paid half by December 31, 2021 and half by December 31, 2022.
  • A bunch of other things I don’t fully understand so I won’t write about.

$2T List

Here’s a partial break-down of the $2 trillion:

  1. $250B for direct payments/checks to individuals and families. (see above)
  2. $367B for small business loans. (see above)
  3. $250B to boost unemployment insurance benefits. (see above)
  4. $500B in loans for distressed companies. $50B of this is earmarked for airlines.
  5. $130B in funding for hospitals and medical equipment.
  6. $150B in funding for state and local governments.

Miscellaneous

  • Allows up to $300 of charitable contribution deductions for those who do not itemize who usually can not take a charitable deduction. This could be a nice little savings for a lot of people. The way this new rule was worded implies that this is not only for 2020 but will be a permanent feature of the tax code for the coming years. Charity donations since January 1, 2020 will qualify for this deduction. (Donations must be made directly to a charity, not to a donor-advised fund. I’m uncertain if stock/property donations work for this or if it’s limited to cash donations.)
  • A less relevant change is that, for 2020, those who itemize can get up to 100% of your income deducted through charitable donations; typically the limit is 50%.
  • Most federal student loans borrowers will have payments and interest deferred until September 30. (Also, for popular loan forgiveness programs, like PSLF, borrowers will get credit for payments during deferment period.)
  • Certain coronavirus-related costs can be withdrawn from retirement fund without 10% early withdrawal penalty, up to $100,000. You can also borrow up to $100,000 from your 401k for reasons related to the pandemic.
  • Those at an age who are required to take a minimum distribution from their retirement account will not have to do so this year.
  • Stimulus Bill Forbids Credit Agencies From Issuing Negative Marks For Certain Deferred Payments

Information is still breaking, I tried my best to break it down in this post. Please add anything missing or corrections in the comments below.

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Bruce
Bruce

I still can’t nail down if the $1200 check is based on 2018 or 2019 tax returns. Different articles say different things

Doug
Doug

I’ve read that it would be based off of 2019 and only 2018 if you have not filed yet.

kevbot
kevbot

They’re using 2018, but it is actually based on 2020 returns, so if the amount isn’t right, it will be reconciled next tax season.

https://twitter.com/NKaeding/status/1242826898851409921?s=20

Bruce
Bruce
JT
JT

So by getting more income this year up to 75k I can effectively raise my stimulus check? Is that correct?

Ashley
Ashley

Best estimate I’ve seen is 2018 if 2019 is not available. Basically, they’re going with your most recent and that makes sense since they’ll be using your most recent direct deposit info to get the check to you ASAP.

lenin1991
lenin1991

CNN is reading the full text and clearly says: “Qualifying income levels will be based on 2019 federal tax returns, if already filed, and otherwise on 2018 returns”.

The article you linked below is from this morning, so that was speculative.

MissMBA
MissMBA

A lot of people wait to file last minute in April or during March. So for those the latest filed income tax, 2018, will be used.

GengisKhan
GengisKhan

What they should do is reconcile it all on the 2020 tax return. So send out checks based on 2018 or 2019 but then make people pay it back or get a tax credit if they earned more or less in 2020 – just like they do with Obamacare.

YoniPDX

Will be curious to see if this is a tax rebate or if it will be taxed as a gift.

JV
JV

Sorta hate the phase-out limit. I hardly get any of the stimulus. Now back to watching the turbulent stock market

jackgopack4
jackgopack4

I also hate the phase-in. My wife was out of work the first half of 2018 and thus had above $2500 income but not enough to trigger any tax liability. Might rush to file this year if that means an extra $600

YoniPDX

Bank bonuses? 1099-int?

jackgopack4

iknow
iknow

If y ou file a joint return you get $2400

John C
John C

Thank you the Democrats, for not letting this administration give all the money to the big corporates. Wouldn’t have gotten this much if the Democrats didn’t step in.

LC
LC

shut the fuck up

Trumpie
Trumpie

Funny to see how the Trump supporters’ heads explode when they see facts.

Lc
Lc

Please no politics turd

Kay Lowe
Kay Lowe

No, actually quite happy w/Trump. So, how’s the weather in your part of the country? So sick of rain here in Mid.TN.

Joe Buck
Joe Buck

Thank you to the Republicans for making sure the money went in checks to the people and to businesses to cover unemployment (which businesses pay into with insurance). Wouldn’t have gotten this much if the Democrats hadn’t seen sense. It will be nice to have jobs to return to, instead of giving more money to state governments that continually point the blame elsewhere (Trump) for their lack of leadership, action, and preparation and letting the businesses close.

cjb
cjb

“I ask everyone if we can please not debate this politically.”

The first line of this article, in bold. Way to be respectful.

fitzejunk
fitzejunk

One job.

They have one job.

One.

NationalChamps2015
NationalChamps2015

You’re the worst type of person. Seriously. The worst.

John Adamson
John Adamson

That’s not true at all. President Trump was the first one pushing for checks of at least $1000 per adult instead of just increasing unemployment benefits like the democrats wanted. This has been a very quick response by the Trump administration. As long as this virus shutdown doesn’t last too long outside the coastal hotspots of NY (where I am), Washington and California, this might be enough to keep the economy afloat with the banks also giving payment deferments and the unemployment benefits.

squeeze
squeeze

Not talking politics, just stating the facts: Democrats are responsible for doubling the $1 trillion to $2 trillion. They secured $100 billion for hospitals and providers. They also strengthened requirements (re: stock buyback restrictions, restricting exec compensation, prohibiting businesses controlled by government heads including the President) that were totally unmentioned in the original McConnell bill. Democrats secured payroll payments for airline workers. Likewise, Democrats secured student loan relief for around $5k. And the main topic of discussion here: Democrats were responsible for doubling the payments from $600 to $1200.

Again, not discussing politics, just stating the facts as to how this $2 trillion plan came to be what it is as we speak.

Welfare King
Welfare King

Only took three months since he learned from the intelligence community the depth of the crisis. President knew beginning of January; Congress knew later and sold shares by beginning of February. Don’t think anyone did anything “first” or appropriately in this situation, because otherwise we wouldn’t be discussing checks at all.

sybloc
sybloc

The idea of sending checks directly to Americans was initially proposed by Ro Khanna, campaign manager for Bernie Sanders.

UBI (Universal Basic Income), which is a monthly payment to all Americans, was one of Andrew Yang’s main campaign thrusts.

Dan M.
Dan M.

Just the kind of comment that pushes libertarians to slide right.

86
86

Cash payouts to many (much needed for some), and in an election year, no less.

Tom
Tom

Why haven’t the comment and all the replies been deleted? It will only get worse unfortunately.

sybloc
sybloc

For real. The orange cumstain would of just written a $1T check to himself.

sybloc
sybloc

Guess he’ll have to be happy with $500B.

https://www.commondreams.org/news/2020/03/28/unacceptable-dems-fume-after-trump-announces-plan-refuse-congressional-oversight

Goodbye Democratic party. You’re pathetic.

David
David

Need to wait for the full text details. I’ve heard it’s based on 2018 tax returns, since not everyone has filed for 2019 (not due to April – now July). What if you had a baby born in 2019 and obviously wasn’t on your 2018 tax return? What if you made $200k in 2018 (over the limit) but were unemployed all of 2019?

Does it count interest income (bank bonuses) and/or capital gains or just wages?

Guess I just gotta wait it out to get the answer to these questions.

Casey
Casey

Good questions. I had a baby born in 2019 and haven’t submitted my taxes yet. I wonder if it would be wise to do that ASAP in case they go with your most recent tax return.

MoneyRx
MoneyRx

Also had a child in 2019 and haven’t filed yet. I am thinking the same thing that I need to file ASAP.

Patrick
Patrick

I had a baby born in Feb 2020 (have another one that was born in 2018). I’m curious how that would shake out since technically had the baby before all of this. I saw some comments where people were talking about how 2020 returns would be consulted down the line for changes (who knows if this is even true).

I have a hard time thinking that I would get the additional $500 for the baby born this year, even if I have the 2 dependents on my 2020 taxes. At least I will get $2,900.

CryptoChrist
CryptoChrist

Had a foster child as of Feb 2020 myself. Really hoping that all gets worked out in the families favor. My foster classes are now cancelled for the months to come and those were going to improve the foster parent pay rate due to extreme needs of the child, like requiring one parent to work less thus requiring supplemental from the state foster system… Oy vey!

GengisKhan
GengisKhan

Bet you wish you’d had twins now.

ihank724
ihank724

IRS actually bases you AGI of 2020 to determine your eligibility of the check. Previous tax filling is used as a practice way to send out check in advance. The evidence is that IRS will claw back the check if you receive the check but make too much eventually in 2020. So you won’t miss the $500 of your 2019-born baby. Worst case is that you will claim it in your 2020 tax filing.

David
David

Where are you getting this kind of detailed information from when we haven’t seen the actual text of the bill that has yet to be seen (or voted on)?

I’m not doubting you, it just seems… very information based but I’m not aware of any informative sources?

Dave P
Dave P

Hopefully this is correct. In 2018, I was fortunate to have a good year thanks to a larger-than-usual bonus, so I’m above the cutoff there. 2019 was a bit lower, and 2020 currently stands to be significantly lower AGI. So based on my 2018 filings, I’d likely get nothing, based on 2019 filings I’d get a little, and based on estimated 2020 filings, I’d likely get the full amount. So I definitely hope that come next tax season, I’ll be able to get the true-up adjustment. I’m sure there are quite a few people in similar situations.

But overall, I’m just glad a reasonable compromise has been reached and this is moving forward.

Dave P
Dave P

According to The Hill:

The payments are essentially an advance on a credit against 2020 taxes. People who receive advance payments based on their 2018 or 2019 income but qualify for a bigger credit amount based on their income this year will receive the remainder of the credit amount to which they are entitled when they file their 2020 tax returns next year.

Recipients will not have to pay any money back to the government if their 2020 income is greater than their income in previous years, according to a Republican aide for the Senate Finance Committee.

Sfay
Sfay

Filed and received for 2019. So all bank bonuses will count.

C T
C T

So if this is based on a prior year tax return, if you didn’t need to file does that mean you don’t get anything?

AB
AB

You’ll still get $600 if you didn’t need to file.

Frank
Frank

My small business reselling effectively went under because of this. I don’t have employees and it’s a side gig. Can I claim all of my rent for loan expenses or just the federal standard?

qmc
qmc

uh, consult your tax professional (one that is paid to give you correct answers)

john m
john m

I think the $600 on top of what unemployment gives is a typo their going to fix. You could possibly make more on unemployment than actually working. Probably give you the difference to get what you earned at your job.

Al
Al

Very crazy if someone that used to make $10/hr x 40 hrs a week ($400/week) will now get $800/week ($600/week plus whatever unemployment their state gives (maybe 50% of their pay, so $200/week))

DS
DS

It’s disaster relief and is only for a few months at most

SamL
SamL

The bill will not pass until that is removed. People would make more unemployed than working, which would boost unemployment numbers artificially, creating bad-looking economic statistics. It would also torpedo a lot of businesses. One hopes this was an innocent oversight that will be corrected, but we’ll see how things develop.

SamL
SamL

Holy cow! An extra $600 per week times 39 weeks (max unemployment payout time) is an extra $23,400 — PER PERSON in this scenario. This would obliterate the economy. It’s impossible that this could make it to the final version. Who would support this devastation?

Eric
Eric

I’m guessing you are not unemployed.

Joe
Joe

Because he can do math?

Eric
Eric

No, because if he was about to get $600 more per week (assuming this is accurate) I think he would have used a less strong word than “devastation”.

DS
DS

Meanwhile none of the people shitting bricks over common people getting a few thousand extra dollars don’t bat an eye at all the corporations getting billions..

Jack
Jack

It’s an extra $600/week for 4 months (…give jobless workers an extra $600 a week on top of their state benefits for four months) not 39 weeks.

Welfare King
Welfare King

How does one earn unemployment for voluntarily leaving their job? It’s the first requirement on every state unemployment website, which the federal regulation relies on: you cannot choose to go on unemployment rolls, and you can’t defraud the government, and you need evidence of your situation and recovery for auditing at all times or face suspension and repayment of benefits (or worse).

qmc
qmc

Yea, we don’t want people going in, we want them to isolate. We acknowledge that that merely the level of full time employment at minimum wage is not going to be enough to live on (in most parts of the country (by population), anyways), and we don’t want them to feel like they need to go in to work until this is under control a bit.

Brian
Brian

Is there anyway to include children born in 2019? Assuming you haven’t completed your 2019 taxes yet. If you have already submitted your taxes and they have been approved, am I correct in assuming they will they get the $500?

Dave
Dave

Omg the total on my 2019 tax return is 100,xxx. Just give me a minute and a corner to cry 😭

Doctor of Debit
Doctor of Debit

Lol. Just be glad that you made more than 100k in 2019, k?

Nick
Nick

Well if it was 99,xxx you’d only recieve like 50$. A phase out region from 75k to 100k means the 1200 evenly reduces. Meaning for every $20 in income over 75k you lose $1 in benefits

AB
AB

It’s done at $5 per $100 intervals.

Nick
Nick

Yes $5 per $100 and $1 for $20 is the same thing

Kevin
Kevin

Give me $25k of your income and I’ll send you a $1,200 check. I don’t want you to be left out.

Ben
Ben

Or you can just send him a 1.2k check regardless. Afterall, all that tax he paid on the $100k is what’s helping to pay for all the broke people’s 1.2k check..

Eric
Eric

I hope you are joking. This reminds me of someone winning the lottery and complaining about their massive tax bill.

Wes
Wes

Taxation is theft. The lottery winner has every right to complain.

Kyle Shanahan
Kyle Shanahan

people making 100k in SF LA SD NYC North Jersey CT or Boston arent “hitting the lottery” bro

Celia
Celia

Last time I had something like that, a few grand putting me over on my cap gains tax, I opened an IRA for my spouse to bring my AGI down. Not sure it’s feasible on your end.

chris
chris

That SBA loan would come in handy. I will definitely be applying for that.

Sa
Sa

Sba loans come with penalties if used for non business purposes. But i am sure you need it for your business.

Master Allan
Master Allan

I spent the last hour or so contemplating my tax situation and reading. Tax year 2018 filed. Tax year 2019 not filed and unlikely to file before June 2020 due to a tax liability. A stimulus check (married joint filing) based off of a 2018 return will be $2400. Until someone reads my 2019 return later this year. That $2400 would suddenly become an overpayment. Suppose the to-be-programmed Turbo Tax tax year 2020 would catch that I accepted, due to return filing timing, I received too much Stimulus money. Maybe I should just have kept my mouth shut!

ps
ps

Do we know citizenship is required or us tax person should get it too ?

GoPack
GoPack

Good question, wonder if green card/work visas get anything

Dan
Dan

Impossible to tell for now. Assume they don’t and be surprised if they do.

Az
Az

Actually, I think most likely non-citizen US persons will get it as was the case back in 2009. The more interesting question here is how this will be treated with respect to the public charge issue for immigration purposes.

Dean
Dean

The rebate goes to “U.S. persons,” IRS speak, which includes non-citizens, ie both permanent residents and those on nonimmigrant work visas, if you have spent the requisite amount of time in USA in the past few years. Not sure about nonresident US citizens.

OffByOne
OffByOne

Can you point to any official documentation (of the bill, perhaps) where this is clearly stated?

DrLA
DrLA

You can look up the bill S.3548 – CARES Act. But this isn’t the final bill yet.

arl16
arl16

Looks like the criteria to send checks is IRS tax returns submitted in 2018 or 2019. My thought is that as far as you filed as a resident alien in 2019 (or 2018 if you haven’t filed 2019 forms), you’ll get the check.

My conclusion is based on the fact that IRS has no way to differentiate between tax filers based on their immigration status. All they can differentiate between is if you filed as US RESIDENT or NON-US RESIDENT. And as far as you’ve spent enough time in the US, you’ll qualify for US RESIDENT tax filer status regardless of your immigration/visa status.

lefty
lefty

Yes every one except nonresident alien will get the check. Substantial presence test to qualify individuals for filing as resident alien still has exemptions based on immigration/visa status so it’s not like if you stay long enough then you will automatically qualify.

Dan
Dan

Nvm

Mo
Mo

0/7 on my amex cards….joking aside, I apparently make too much money to help stimulate the economy.

Ben
Ben

It’s the thanks we get from this system for contributing the most tax money aside from the top 5%.

Joe
Joe

Would it change your spending patterns? I will get a check. I make enough that I won’t spend it, but I don’t make so much that I would donate it. It’ll just get dumped into a new bank account to keep it fee free while I clear another bonus.

I don’t think that helps stimulate the economy either.

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