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.
  • They’ve also started sending out prepaid debit cards in place of checks to some people.

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. Or even more than their salary.)
• 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.

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.

Follow-up Articles:

•  US Stimulus: Should You File Your 2019 Tax Return Now?
• Stimulus Bill Adds $300 Charitable Contribution Deduction For 2020 & Beyond
• Stimulus Bill Forbids Credit Agencies From Issuing Negative Marks For Certain Deferred Payments
• Stimulus Bill: Making Sense Of The Options For Small Businesses & Employers (Grants + Loans)
• Stimulus Bill: Explaining the Unemployment Benefit for Employees, Self-Employed & Gig Workers
• Stimulus Checks: People Who Don’t File Taxes Can Register Their Bank Info With IRS-TurboTax Online Portal To Get Their $1,200
• Stimulus: EIDL Grant For Small Businesses Will Be $1,000 Per Employee, Per SBA Clarification
• IRS Now Lets You Check Your Stimulus Payment Status
• A Few Updates On Those $1,200 Stimulus Checks
• A Few Updates On The Small Business Grant & Loan Programs (PPP, EIDL Funding Round 2)
• IRS Website Finally Allows You To Add Bank Information For $1,200 Stimulus Direct Deposit
• Lawmakers Overhaul PPP Loan Forgiveness Program For Small Businesses
• EIDL Loan & Grant Program Reopens For New Applications