Spending Your Coronavirus Stimulus Check

Last Friday President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

I’m not going to go into too much detail about everything in the act (if you’re interested you can read a long summary of it here), but I do want to talk for a minute about the stimulus checks.

Everybody gets a $1,200 check! So if you’re a married couple you get $2,400. Plus you get $500 for each child under age 17.

But actually, not everyone will get a check. Here are two important disclaimers:

1. If you make too much money, you won’t get a check. The income number used for this test is the Adjusted Gross Income (AGI) from the last tax return that you filed (either 2018 or 2019). If you are a couple with an AGI under $150,000, you get a full check. If your AGI is between $150,000 and $198,000, you get a smaller check. Once your AGI is over $198,000 you do not get a check. For single taxpayers, your income limits are half of the above amounts.
2. You may have to give your check back! I actually could not find an authoritative source while researching this, but one article I read said that the government may look at your 2020 Adjusted Gross Income to see if you were actually under the income limit to receive a check. I have multiple clients whose 2018 income was under the limit, but their 2020 income will not be. Until we hear better guidance about this, consider that the government may ask for their money back in April 2021 when you file your 2020 tax return.

Now if you do get a check, it will be treated as tax-free income. And the money will be delivered to you in the same way you paid your last tax bill (by mail or by bank draft). If you closed the bank account you drafted your last tax bill out of, you’re going to have to wait for the government to figure that out and then mail your check.

So what should you do with all of this newfound cash?

I wrote a blog post last year about what to do if you find that you have too much cash. I’m guessing that’s not a luxury most of us have right now during this uncertain time though. 

Here are some ideas for what to do with your stimulus check:

1. Pay your bills! That’s the purpose of this money anyway: to keep your family afloat if your income has gone down because of coronavirus.
2. Give it to someone who really needs it. I’m fortunate that my business income has not been affected by coronavirus. I wouldn’t feel right taking money that is intended to help those who really need it.
3. Put it in savings in case you need it in the near future. Even if you don’t need it right now, your job situation could change over the coming weeks or months, and you may need it then.
4. Spend it locally. Help your local restaurants and small businesses. 

I’m guessing the government may send out more rounds of checks depending on how long this pandemic lasts. Be intentional with your plans for it.

Stay safe, and let me know if there is anything I can do to help you and your family.