What Should I do with My 2021 Stimulus Check?
The third round of COVID-19 relief stimulus checks are set to arrive in mailboxes later this month. This article explains if and when you should expect to receive your check as well as tips on how you can most effectively use it. If you’re still looking for your first or second stimulus check, use the IRS’ Get My Payment tool.
How much is the stimulus check?
The legislation states that single Americans could receive up to $1,400, married couples could receive up to $2,800 and parents/guardians could receive $1,400 for each child and adult dependent if they earn less than the income limits discussed in the next section.
Will I get a stimulus check?
While it’s estimated that 90 percent of Americans will receive a stimulus check, there are guidelines in place as to who gets a check and how much that check will be.
One eligibility guideline is based on income. Your income eligibility is determined by your 2020 tax filing, or if you haven’t filed yet, your 2019 tax filing. The tax return must have been filed using a Social Security Number. Tax returns filed with Individual Tax Identification Number are not eligible.
Individuals who earned below $75,000 in adjusted gross income (AGI), married couples who earned below $150,000 AGI, and head-of-household filers who earned below $112,500 AGI may receive the full amount. Individuals and couples who exceed these income thresholds may still receive a check. However, the amount decreases incrementally with every $1,000 of additional income earned. Individuals with an AGI above $80,000, couples earning more than $160,000 AGI and head-of-household filers with an AGI above $120,000 and are not eligible for a stimulus check.
Another guideline is based on US citizenship. Families with mixed US citizenship (where at least one member of the household has a Social Security Number) are eligible to receive payment. However only the spouses and dependents with social security numbers will be eligible for a payment. US citizens living abroad, citizens of US territories, incarcerated people and those who owe child support are also eligible to receive a 2021 stimulus check.
Americans receiving Social Security benefits, including retirees and people on disability assistance, also qualify for a stimulus check. The same income requirements apply and since many retirees no longer file tax returns, the government will obtain their income data through the Social Security Administration to determine the rebate amount.
How will I get my stimulus check?
You could receive your stimulus check via direct deposit, a physical check, or an Economic Impact Payment (EIP) debit card. If the IRS has your bank account information on file from your most recent tax return, it will likely be deposited into your bank account. If no bank account is on file, your check will most likely be delivered to your mailbox.
An EIP debit card is often used when no bank account is on file and/or if the IRS wants to distribute the check quickly for various reasons.
When will I get my stimulus check?
Stimulus checks are expected to start being direct deposited in accounts by the week of March 15th. Paper checks are expected to begin being mailed out approximately one week after that. If you are expecting a stimulus check but haven’t received it yet, you can check the status using the IRS’ Get My Payment tool.
Do I have to pay taxes on my stimulus check?
The stimulus payments are not counted as taxable income and do not have to be counted as income when you file your next tax return.
How should I spend my stimulus check?
The stimulus package was created and passed to help individuals weather the financial storm created by COVID-19. While you may spend your check as you see fit, here are some suggested ways to spend it in order to have the greatest impact on your wallet and your community.
Pay Monthly Bills
If the impacts of COVID-19 have impacted your ability to work and pay your monthly bills (mortgage/rent, utilities, food, medical needs, insurance, etc.), use your check to help pay for these items.
Build Your Emergency Savings Account
If there is one thing we can all learn from COVID-19, it’s that unexpected things can and do happen that have a negative impact on our finances. Use the stimulus check to prepare for the next unforeseen circumstance by using it to build your emergency savings account.
Pay Off Debt
If you can pay your monthly bills as you did before COVID-19, consider using your stimulus check toward paying off existing debts that you have. Your future self will thank you.
If your emergency savings is up to par and your debt is paid off, consider investing your refund in a retirement savings account, such as a traditional IRA or a Roth IRA. Again, your future self will thank you. To get started or learn which investment option may be best for you, contact an FNBO Advisor.
Support Local Businesses
Social distancing has forced small businesses to limit their hours and operations and/or close temporarily. This will undoubtedly have a negative impact on their bottom line. Consider supporting local small business so that they can stay open and pay their employees by using your stimulus check to place online orders, purchase gift cards for future use, or ordering take-out form restaurants.
Everyone has a role to play when it comes to overcoming COVID-19 and the devastation this virus will leave in its wake. By working together, we will weather this storm and we will be all be stronger because of it. Consider using your stimulus check to support one or more of the local and national efforts related to overcoming the devastating impacts of the pandemic. A few examples can be found here.