Did you know that stimulus negotiations are headed for a dramatic Tuesday? Or that the IRS uses a specific formula that determines how much money each household received in the first check? How about whether or not you’ll have to pay taxes on your stimulus money in 2021?
We give you the bottom line to questions that are anything but simple, like the timeline to send a second check to the eligibility twists and turns, which stimulus proposal wouldn’t yield another direct payment and even how you could get more money in the next stimulus payment than you did in the first.
Here’s the major information we know right now about stimulus checks. We update this story often.
Current Mortgage and Refinance Rates for October 2020
1. Stimulus negotiations are coming to a head
Tuesday could be an important day for stimulus checks as negotiations reach a tipping point before the Nov. 3 election just over two weeks away. That’s when the Senate will vote on a new stand-alone bill to renew the Paycheck Protection Program. A day later, Senate Majority Leader Mitch McConnell will lead another vote on last month’s failed “skinny” stimulus bill — which doesn’t include money for stimulus checks — potentially setting up a battle between Senate Republicans and the White House, which is currently negotiating a comprehensive package with Democrats.
Tuesday is also the deadline House Speaker and lead Democratic stimulus negotiator Nancy Pelosi has set as the last day to finalize the White House’s $1.8 trillion stimulus offer if the bill has a chance of passing before the election.
These two opposite approaches — for a large bill with checks and two small bills without direct payments to Americans — will help determine if another check arrives well before the end of 2020, or if it will have to wait until the election results are in. Here’s everything you need to know about the Senate’s upcoming vote and what it could mean for you.
2. Stimulus payment calculations follow this formula
You may be interested to know that the IRS has a formula for working out how much stimulus money you could get, and that’s what determines whether you receive the full amount, a partial payment or far more than the $1,200 if you have kids.
It also explains how you might still be able to get some stimulus money, even if your family’s yearly income exceeds the limit set out by the CARES Act in March. The calculations start with your household’s total adjusted gross income, add on the money allotted to qualifying dependents, and then start deducting from the total, based on your income bracket (as defined by the CARES Act).
You can calculate how much you could get in a stimulus check now, including for a second check.
3. Most people paid off debt or saved their stimulus money
A new survey this week on how people in the US used their first stimulus check shed light on the economic reality of the coronavirus’ effects. The survey from the Federal Reserve Bank of New York polled 1,300 households between June and August. The study found that of the 89% who reported receiving a stimulus check ($2,400 median total):
- 29% spent the stimulus money (on essentials, nonessentials and donations).
- 36.4% saved their stimulus money.
- 34.5% used it to pay down debt.
When asked what they’d do with a second check of $1,500, 45% of respondents said they’d save the money, 30.9% said they’d apply it toward debt, and 24.2% said they’d spend it in some way.