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Will You Get a Coronavirus Stimulus Check?

The Motley Fool logo The Motley Fool 3/25/2020 Dan Caplinger

Video by CNBC

People around the world are suffering from the impact of the coronavirus pandemic, with hundreds of thousands of cases of COVID-19 and signs of further spreading. Many are also struggling economically as national, state, and local governments both in the U.S. and across the globe use extraordinary measures to try to stem the spread of the disease.

Lawmakers in Washington agree that Americans need relief from the economic impacts of the coronavirus crisis, but they've fought hard about exactly how the federal government should provide that relief. Now, it appears that senators and representatives in Congress have come to a deal that firms up exactly what people should expect -- and under that deal, not everyone would get a check.

Below, we'll look more closely at the reported details.

What a coronavirus stimulus check would look like

Early proposals about how to give ordinary Americans some help took several different paths. Initially, some wanted to offer people a payroll tax holiday, which would've boosted take-home pay for workers and also provided businesses with some relief as well. However, opponents noted that eliminating payroll taxes wouldn't help those who'd already gotten laid off or had their hours cut, and it also raised questions about future financial support for Social Security and Medicare.

In response, lawmakers pivoted to a more direct method: sending $1,000 checks to everyone. That would have the benefit of getting money into the hands of those who need it quickly. Again, though, some officials questioned whether everyone really needed to get cash now.

The compromise position looks like this:

  • Each eligible adult will receive up to $1,200 from the government.
  • For every child in a given household, the amount of the total check would go up by $500.
  • However, there are income limits on receiving the stimulus check. If your adjusted gross income is less than $75,000 for single filers and $150,000 for joint filers, then you'll get the full amount. For every $100 you earn above those limits, though, the payment drops by $5. That means that for those with no children and income levels above $99,000 for singles and $198,000 for joint filers, no stimulus check would come. Those with incomes between those levels would receive a reduced stimulus check payment.

Some of the logistical details aren't yet entirely pinned down, but one aspect that could cause considerable confusion is in determining income for purposes of the legislation. In an effort to get the checks out as quickly as possible, the federal government apparently intends to use 2018 reported income as filed on federal tax returns in determining eligibility. However, some believe that the final legislation could treat the payments as an advance credit that will be verified on 2020 tax returns. That raises the question of whether taxpayers will have to establish their eligibility again based on 2020 income levels -- and potentially have to pay back their stimulus checks if their income rose between 2018 and 2020.

When will the coronavirus stimulus checks come?

There's also some uncertainty about how quickly Americans should expect to receive their cash. Treasury Secretary Steven Mnuchin has assured the public that he intends to try to get checks out within two weeks.

However, many are skeptical about how quickly the government can do the necessary legwork to get money out to Americans. Because of the income-based eligibility limits, the Internal Revenue Service will have to get involved in cross-checking who should get a check and who shouldn't. With IRS staffing already at reduced levels and also facing coronavirus-related pressures, it could be more difficult than usual to fast-track sending stimulus checks.

Don't spend it yet

If you've been waiting for a final word on stimulus checks to feel comfortable making some discretionary purchases, you should probably wait longer if you can. Until final legislation makes its way through Congress and the Treasury figures out the exact process involved, you should plan on some delays in getting your coronavirus stimulus check.

United States Capitol © Brendan Hoffman / Getty

United States Capitol

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