To help prop up an economy ravaged by COVID-19, many Americans will receive stimulus checks from the government later this month.
Easing the Pain of an Economic Tsunami
Finance professor Dr. D.K. Malhotra answers FAQs about the coronavirus stimulus checks.
An economic crisis looms, and the government is injecting liquidity through a stimulus package.
What’s the historical precedent for the government issuing stimulus checks?
We don’t have to go back too far. During the 2008-2009 economic crisis, the U.S. government provided tax rebates to low- and middle-income U.S. taxpayers and tax incentives to stimulate business investment.
Tax rebates created by the law went to individual U.S. taxpayers during 2008. Most taxpayers below the income limit received a rebate of at least $300 per person ($600 for married couples filing jointly). Along with their individual payment, eligible taxpayers received $300 per dependent child under age 17.
We now face another economic crisis, and the government is injecting liquidity through a stimulus package.
If a Jefferson student is claimed as a dependent on his or her parents’ tax return, parents will get $500 per child. Students won’t get a separate payment.
When should people expect to receive the money?
People should see payments by the third week of April. They will be distributed automatically, with no action required for most. However, some seniors and others who typically don’t file returns will need to submit a simple tax return. The IRS website provides details instructing these groups on how to file. The IRS will calculate and automatically send the payment to those eligible.
How much money will people receive?
If you have adjusted gross income up to $75,000 and file as an unmarried individual, you can get a payment of $1,200. This payment will be reduced as your adjusted gross income increases, and at $99,000, you won’t get the payment.
If you and your spouse file a tax return jointly and have income up to $150,000, you will receive the full payment for $2,400. The payment is reduced by $5 for each $100 above the $150,000 threshold, and you will not get any payment if your income is over $198,000.
If a Jefferson student is claimed as a dependent on his or her parents’ tax return, parents will get $500 per child. Students won’t get a separate payment.
In summary, eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents receive $500 for each qualifying child.
Don’t treat this check as a Christmas gift.
There’s no universal answer, but what do you suggest people do with the money?
Don’t treat this check as a Christmas gift. It’s a one-time payment to ease the pain of an economic tsunami unleashed by the coronavirus. If you have been laid off, you will obviously need this money to pay for rent or mortgage or maybe food.
If you still have a job, I would highly recommend that you don’t spend this money on something like a gaming console. Save it and invest it. You will need it in the near future.
If you’re one of those lucky people not financially impacted by the crisis and still receive money, think about others who may need it more than you.
Do you think there will be another round of stimulus checks after this one?
Let the dust settle and we will find out the damage done by this virus. We may see another stimulus.
