Understanding Your Stimulus Check

Last updated Jun. 22, 2024 by Peter Jakes

Since the beginning of the COVID-19 pandemic, the U.S. government has rolled out multiple stimulus checks to provide financial relief to Americans. Understanding the intricacies of these payments can be crucial as it affects your household finance, taxes, and spending capabilities. This article aims to unravel the complexities surrounding stimulus checks and provide answers to common questions.

What is a Stimulus Check?

A stimulus check is a direct payment from the federal government intended to stimulate the economy by providing financial support to individuals and families. The payments are part of larger economic relief packages designed to support people facing unemployment, reduced income, or other financial challenges due to the pandemic.

History of COVID-19 Stimulus Checks

The CARES Act

• Date Passed: March 27, 2020
• Payment Amount:

  • $1,200 per adult
  • $500 per eligible child under 17

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was the first economic relief package that included these direct payments to Americans.

The Consolidated Appropriations Act, 2021

• Date Passed: December 27, 2020
• Payment Amount:

  • $600 per adult
  • $600 per eligible child under 17

This was the second major economic relief package, offering a smaller, supplementary payment.

The American Rescue Plan Act of 2021

• Date Passed: March 11, 2021
• Payment Amount:

  • $1,400 per adult
  • $1,400 per eligible dependent, including college students and elderly relatives.

The third wave of economic relief was more encompassing, aimed to cover a wider range of dependents.

Eligibility and Amount Calculation

Eligibility for receiving a stimulus check depends on several factors, including your filing status, income level, and the number of dependents you have.

Filing Status

1. Single Filers: Eligible for full payment if your Adjusted Gross Income (AGI) is $75,000 or less. Payment phases out completely at $99,000.
2. Married Filing Jointly: Eligible for full payment if your combined AGI is $150,000 or less. Payment phases out completely at $198,000.
3. Head of Household: Eligible for full payment if your AGI is $112,500 or less. Payment phases out completely at $136,500.

Income Level

Income is based on your AGI, as reported in your latest tax return (either 2019 or 2020, depending on when you filed).

Dependents

The CARES Act and the Consolidated Appropriations Act of 2021 limited dependent payments to children under 17. The American Rescue Plan broadened this to include all dependents, regardless of age.

Special Cases

• Non-Filers: People who don’t usually file tax returns (e.g., low-income individuals, Social Security recipients) may still be eligible and can use the IRS Non-Filers tool.
• Mixed-Status Families: Households with members having different immigration statuses have specific guidelines to follow.

How to Receive Your Stimulus Check

Direct Deposit

If the IRS has your bank account information from a previous tax return, you’ll likely receive your payment via direct deposit.

Paper Check

If the IRS doesn’t have your bank details, the payment might come via a mailed paper check. This method can take longer.

Economic Impact Payment (EIP) Card

Some recipients receive a prepaid debit card known as an EIP card containing their stimulus payment.

Common Issues and Solutions

Missing Payments

If you haven’t received your payment, several avenues are available:

• IRS Get My Payment tool: Track your payment status online.
• Recovery Rebate Credit: If eligible, this can be claimed on your tax return.

Incorrect Amount

If you believe you received an incorrect amount, you may need to claim the difference using the Recovery Rebate Credit on your federal tax return.

Checks Sent to Deceased Individuals

In some cases, stimulus payments were mistakenly sent to deceased individuals. The IRS usually requests such payments be returned.

Stimulus and Taxes

Not Taxable

Stimulus payments are not considered taxable income. You don’t need to pay taxes on these sums.

Impact on 2020 and 2021 Tax Returns

While these payments aren’t taxable, they may impact the amount you owe or your refund size. The Recovery Rebate Credit can be claimed if you didn’t receive the proper amount.

Overpayments

The IRS will not require repayment of any overpaid stimulus amounts, unless the overpayment was made on behalf of a deceased individual or due to a clerical error.

FAQs

How Can I Check My Payment Status?

Use the IRS’s Get My Payment tool to check the status of your stimulus check.

What if I Didn’t Receive My Check?

If you didn’t receive your payment, or received an incorrect amount, you can claim it as a Recovery Rebate Credit on your next tax return.

Will I Owe Tax on My Stimulus Payment?

No, stimulus payments are not considered taxable income.

Can Undocumented Immigrants Receive a Stimulus Check?

Generally, non-resident aliens are not eligible for stimulus payments. The American Rescue Plan Act has provisions for some mixed-status families.

How Are Payment Amounts Determined?

Payment amounts are primarily determined by your adjusted gross income (AGI) and filing status on the latest tax return you filed.

Will I Get a Check for My Dependents?

Under the American Rescue Plan Act, dependents are eligible for stimulus payments, including college students and elderly relatives.

How Do I Return a Payment Sent to a Deceased Relative?

If a payment was sent to a deceased individual, check the IRS guidelines for specific instructions on how to return the payment.

Are There Any Penalties for Not Returning a Deceased Individual’s Payment?

The IRS has requested these payments be returned, but there are currently no penalties or criminal repercussions detailed for not complying.

Can I Get a Payment if I Owe Back Taxes?

Owing back taxes does not disqualify you from receiving a stimulus payment. However, it might affect the method of delivery (direct deposit vs. mailed check).

How Do I Claim the Recovery Rebate Credit?

The Recovery Rebate Credit can be claimed by filling out the appropriate section of your federal tax return.

Conclusion

Understanding your stimulus check is essential for financial planning during the pandemic. Whether it’s eligibility, payment processes, taxation, or troubleshooting, being informed can help you maximize the benefits you’re entitled to receive. Always consult the IRS website or a financial advisor for the most accurate and personalized advice.

By being aware and proactive, you can ensure you receive the aid that can greatly assist you during these uncertain times. If you have specific questions or face issues, don’t hesitate to reach out to the IRS or a financial expert for further assistance.