Second Stimulus Checks: What to Know

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You’ve probably heard by now that Congress has passed a $908B stimulus package that includes the second stimulus check that taxpayers will receive during this health and economic crisis. This post will just focus on the direct payments to taxpayers. I’m sure many are wondering when they can expect to receive this, or will they receive it! Let me break this down a little bit so you can know what to expect, and what you should when you get it.

UPDATE, evening of 12/22/20: All the info below is based on the current $908B package that has passed Congress. These terms will stand unless new legislation is added or this bill just dies.

This relief package is bundled with a government funding package. The President has indicated that he wants the relief bill to be changed to increase payments to taxpayers, and to remove the billions of- no better way to say it- “fat” to other countries, race horse enhancement programs, shuttered opera houses, and other items unrelated to coronavirus from the government funding package. He has not vetoed the bill, but it is also not official without his signature.

Usually, a bill will become law even without the President’s signature after 10 days. However, that’s only if Congress is not adjourned. Currently, Congress is on break for the holiday, and a new Congress is being sworn in Jan. 3rd, causing the bill to just die unless it gets his signature before then (or Congress passes a concurrent resolution to keep it “alive”).

Regardless of what the President or Congress finally does, this will obviously affect the timelines outlined below, if not the amount and other terms. More to come.

UPDATE, 12/27/20: The President has signed the spending packages, but there could possibly be more changes as Congress seeks to increase the payments to $2,000 and the President seeks others changes.

So far, the terms outlined below are still accurate, except maybe the timing of when these checks are received. Checks would still be expected to be sent quickly.

I will update again after/if any further changes are made to the terms.

How much will my second stimulus check be?

Getting right to the good stuff: Individuals should be getting up to $600 in stimulus money, and $1,200 for married couples.

Keep in mind that only singles that earn less than $75,000 and couples earning less than $150,000 will be eligible for the full amount. These limits are a reduction from the first stimulus payments. The stimulus payment starts to be reduced incrementally if you make more than this (roughly $5 for every $100 over this amount).

Also keep in mind that this is based on your AGI, not your gross income. If you’re unsure what your number is, go back to your most recently filed tax return.

If you have dependents, you also should get $600 per dependent, which is an increase from the previous round. There is no limit to how many dependents would receive the stimulus. The dependents have to be under 17 to qualify.

Here is a calculator to help determine what your second stimulus check will be: second stimulus check calculator.

When will I get the second stimulus?

While it took 19 days for the funds to be disbursed in the first round, this is expected to go faster this time. People should start receiving the stimulus in early January 2021, but could be as early as next week (December 28th), according to Secretary of the Treasury Mnuchin. The bill states payment should be made no later than Jan. 15, 2021.

Keep in mind that you’ll receive the second stimulus check in the same manner you receive any tax refunds. If you have a direct deposit account listed on your tax return, you’ll receive your stimulus there. If you received paper checks in the past, you’ll receive a check. The electronic disbursements will be delivered first, followed by the paper checks.

Who is and isn’t eligible for the stimulus

If you filed a tax return in 2018 or 2019, you are eligible.

Legal immigrants without a Green Card and undocumented immigrants are eligible for this stimulus payment. The bill is being made retroactive to the first round of stimulus payments, as well. I currently can’t find guidance if the retroactive payments will be automatic or if this is something the previously excluded individuals would have to apply for this. There is likely to be more to come on this topic as the process unfolds.

You are NOT eligible if:

• You are 18 or older, even if you’re high school or college and still listed as a dependent on your parent’s tax returns.
• Adults listed as a dependent (i.e. an elderly adult) on their adult children’s tax returns.

Other things to know

An additional $300 benefit for those who are currently collecting unemployment is included with the bill. This additional payment is good for 11 weeks through March 14, 2021.

These stimulus payments are also not taxable income! Remember that when you file next year.

Lastly, this isn’t official yet as of early morning Dec. 22, 2020. The bill has passed Congress is awaiting the President’s signature. I’ll update this post when that occurs.

Closing thoughts on stimulus checks

Unfortunately, no one will be receiving their stimulus checks before Christmas, obviously. When they do arrive, please consider doing one of the following when you receive your check:

If you’re looking to seed some sort of savings account, check out SuperMoney to compare different accounts to find the best interest rate or terms. Be sure to also check out CIT Bank as they frequently have sign-up bonuses!

You can even search and compare brokerage accounts with SuperMoney if you plan to use your stimulus check to finally start investing.

And if you do decide to donate some of your second stimulus to charity, don’t forget that we will be allowed to write off $300 of charitable donations on our 2020 tax returns, even if we don’t itemize our deductions. This was a provision from the CARES Act to help charities as well as taxpayers.

I hope this was helpful and has given you some ideas of what to do with your second stimulus check!

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