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Helping Heroes Retire

Helping Heroes Retire

Stimulus Checks: What You Need to Know

Posted on April 16, 2020 by Gregg Brant

by Gregg Brant

By now everybody has heard about the government stimulus checks that you could potentially be receiving, but there are still a lot of questions surrounding these checks. This article compiles some of the most common questions and answers for you to use as a guide to your potential check.

  1. Will I receive a stimulus check? Answer: If you meet one of the three criteria below then you will receive a stimulus check:
    • You are a U.S. citizen or permanent resident who filed federal income taxes in 2018 or 2019.
    • You receive Social Security retirement, disability, or survivor benefits.
    • You receive Railroad Retirement benefits.

  2.  How much will I receive? Answer: It depends on many factors. Let’s dive into these:
    • Amount received:
      • $1,200 per person ($2,400 for couples who file taxes jointly), plus an additional $500 for each dependent under age 17.
    • Income Limitations:
      • The $1,200 is phased out beginning at $75,000 if you file single on your taxes, or $150,000 if you file a joint return with your spouse.
      • For every $100 of income above the amounts mentioned above, your stimulus check is reduced $5.

  3. Do I receive a check for dependents older than age 16?
    • Answer: No. There is no $500 benefit for children over age 16, or any elderly or disabled adults who are claimed as dependents. These dependents are also ineligible for the $1,200 benefit since they are being claimed as a dependent on your tax return.

  4. What year’s income are the benefit payments based on?
    • If you already filed taxes for 2019 it is based on your 2019 adjusted gross income.
    • If you have not yet filed taxes for 2019 it is based on your 2018 adjusted gross income.

  5. What income is included in the income calculation to determine your benefit?
    • The stimulus check is based on your adjusted gross income. Adjusted gross income includes:
      • Wages, Interest, Dividends, IRA Distributions, Pensions, Social Security, Capital Gains, Alimony, Business Income, and Rental Real Estate.

  6. How will I receive my stimulus check?
    • If you elected direct deposit on your tax return, you will receive the stimulus check via direct deposit. If you elected a paper check on your tax return, you will receive a paper check.
  7. When should I expect to receive my stimulus check?
    • Stimulus checks that are being sent via direct deposit are starting to be received this week. Paper checks will be mailed beginning on April 24th. The IRS plans to send approximately 5 million checks per week starting with the lowest income families first. So, it could take months before all paper checks are received.
    • Note: If you elected a paper check on your tax return, beginning on April 17th you can follow the below link to input your direct deposit information to obtain your check faster. This link can also be used to track the status of your check.

  8. Do I need to pay this stimulus check back?
    • Contrary to some rumors that have been swirling around; no, the stimulus check is not a loan and you do not need to pay this back. The stimulus check is also not subject to garnishment for federal/state back taxes or student loans.
    • However, the stimulus check can be subject to garnishment from banks for debt collection.

  9. Do I pay taxes on the amount received in the stimulus check?
    • No, you do not pay income taxes on your stimulus check.

  10. What should I do with my stimulus check?
    • This is the million-dollar question. There are many routes that you can take with the money received in your stimulus check and we will outline a couple of these below:
      • Put the balance towards high-interest debt (credit cards, personal loans, etc.)
      • Bolster your liquid cash emergency fund. Target 6-12 months of living expenses.
      • Invest the money into the stock market with the recent dip.

Now, some people would say that a stimulus check is meant to stimulate the economy and that you should go out and spend the money. That is another possibility, but we believe the prudent decision would be to reduce high-interest debt and increase your liquid cash reserve before spending any money received. However, it you desire to stimulate the economy while also contributing to your financial well-being, then investing in the stock market might be a sensible option for you.

Gregg Brant, CFP®, APMA®, MBA

Family Wealth Advisor | Contributor

Gregg is a financial planner who is passionate about helping first responders and their families navigate their financial lives with confidence. Having a spouse who is a professor in the State University System, Gregg has worked with the Florida Retirement System first-hand for his own personal financial planning.

Now Gregg is on a mission to take this knowledge and disseminate it to the people who deserve it most; our first responders.