The $2 trillion federal economic stimulus package signed into law on March 27 comes at a time of tremendous need for many Americans. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, will provide an estimated $603 billion to individuals and families, with about half in cash payments and the remainder related to unemployment benefits and student loans.
The cash payments are being managed by the Internal Revenue Service and will be sent directly to those Americans who qualify. Here’s what you need to know.
Amounts and eligibility: The full payment amounts are $1,200 for individuals with adjusted gross incomes (AGI) up to $75,000, and $2,400 for married couples who file joint tax returns and have a combined AGI up to $150,000. These amounts will be reduced by $5 for every $100 earned above the thresholds, up to certain limits.
Not everyone will receive payment: Individuals who earn more than $99,000 and jointly filing couples with combined incomes of $198,000 and no children will not receive payments.
Additionally, parents will receive $500 for each dependent child up to age 16.
How it works: The IRS is using tax returns from 2019, or 2018 for Americans who haven’t filed for 2019 yet, to determine eligibility and then directly deposits checks into banking accounts. Most people who qualify won’t have to take any additional actions.
Some people aren’t typically required to file federal taxes, such as certain low-income Social Security recipients. Initially, the U.S. Treasury and IRS were requiring them to file an abbreviated tax form in order to receive a stimulus check, which drew considerable ire from lawmakers who said that in many cases, the federal government already had the information it needed. On Wednesday evening, the agencies reversed course; instead, payments will automatically be deposited into the bank accounts of Social Security beneficiaries who don’t normally file a tax return.
Those who haven’t provided banking information to the government have options: The U.S. Treasury announced plans to create a web-based portal for eligible people to enter account numbers. Or they can wait for a conventional check to be sent in the mail. According to one news account, in 2008, the last time stimulus checks were distributed, electronic transfers were made in about three weeks, and paper checks took about 10 weeks to arrive.