For most, only for a few months. And more than half don’t even know how much they’ll receive.
Updated: 12:08 p.m. ET Apr. 16, 2020
The IRS began issuing economic stimulus checks this week and it’s causing a bit of confusion. Here are a few things to clear up:
1. You will still get a stimulus check even if you defaulted on your federal student loan repayments.
Private student loan collectors can garnish your wages, but some are offering borrowers relief through deferment and forbearance. Check out How COVID-19 Will Impact Your Student Loan Repayments to see if your lender is offering any help.
2. Stimulus checks are not loans from the government and are not expected to be paid back. The money you receive will not be considered taxable income on next year’s return.
3. The IRS launched the Get My Payment tool on its website to track when you’ll receive a direct deposit of the stimulus check. Payments are being sent out based on the bank account information provided in tax filers’ 2018-2019 tax returns.
If you made changes with your bank, update that information with the Get My Payment tool.
4. It was estimated that 80 million checks went out yesterday, meaning it may take some time before everyone who qualifies to receive one. Paper checks have not been mailed out yet, according to CNBC.
Expect to wait a few months for those.
President Donald Trump signed a $2 trillion bill last month to help Americans facing financial hardships due to coronavirus – and those who qualify will receive stimulus checks in the coming weeks.
But recent polls have revealed that these checks probably won’t be Americans’ lifesavers. Americans say they’ll need another check in three months or spend it all on groceries. On top of that, some Americans don’t even know how much they’ll receive. This shows that there’s still a lot of uncertainty on how much this will benefit people – especially ones that have lost their jobs.
There have been plenty of surveys and polls examining Americans’ plans for using the checks, but here are the most revealing ones:
What people are spending their stimulus check on
A poll from GOBankingRates found nearly half (42 percent) of people will spend their stimulus checks on groceries. That was the most common answer by an overwhelming amount – people’s second-highest priority for 16 percent of respondents was padding or starting their emergency fund.
A quarter of Americans have no emergency savings at all, according to the poll. With millions of people filing for unemployment, this pandemic has highlighted the importance of having an emergency fund.
While the stimulus check is certainly helpful, not everybody qualifies for it. When coronavirus passes and you’ve rebounded from this financially, start taking your emergency fund more seriously than before. Because next time, it won’t be a pandemic – it’ll be something simple in comparison to something like a car or home damage that requires an emergency fund.
One check isn’t enough for most Americans
The breakdown for the stimulus packages that some Americans will receive is this: $1,200 for adults that make up to $75,000; $2,400 for married couples that jointly make $150,000; $500 for each child you have. But for 63 percent of people, a survey from SimplyWise says, it’s not enough – they would need another check within the next three months.
And 15 percent of Americans, the survey says, would need another check within a mere two weeks.
A record-breaking 3.3 million people have filed for unemployment claims within recent weeks, and it’s not likely that many businesses – excluding essential ones – are in a position to hire people right now. That means that those $1,200 is or $2,400 have to last some people quite a while.
Another factor to consider is location. Most people are still being expected to pay rent (unless you’re one of the 200 or so Brooklynites whose landlord froze rent for a month). So a $1,200 check in New York might not take you as far as one in Oklahoma.
People don’t know the details
While some people are anxiously awaiting their checks, some people hardly know anything about them.
A survey from FinanceBuzz found that 57 percent of people don’t know what the CARES Act – the name of the $2 trillion bill – is. The uncertainty surrounding the new stimulus package doesn’t end there: 55 percent of Americans who are expecting a payment aren’t sure how much money they’ll get.
Others were in the dark on how the payments are going to be taxed or how people will receive them, the survey says. A few people believed that the payments will come through apps like CashApp and Venmo.
The payments will be structured as a tax rebate and will be delivered via direct deposit.
If all your basic necessities are covered, here are six smart ways you could spend your stimulus check if you qualify for it.
Published by Debt.com, LLC