What You Should Do With Your Stimulus Check

March 30, 2020

As you probably already know, the government signed the CARES Act bill into law on March 27th in an effort to help individuals and families get through this difficult time. As part of that law, the federal government will be providing Americans with stimulus money. How much money depends on the amount of qualified income you reported on your 2018 or 2019 income tax return. Let’s dig into this a little deeper. If you already filed your income taxes this year, your stimulus check will be calculated using your reported qualified income from 2019. If you haven’t yet filed this year, your stimulus check will be calculated using your reported qualified income from 2018.

Here’s some additional good news. If you already provided the government with checking account information for previous refunds, they’ll use that information to deposit the stimulus money into your account. However, if you never provided checking account information and you received past refunds in the form of a physical check, expect the same for your stimulus money. So, basically, the vast majority of people won’t have to do a thing to receive their stimulus money within the next few weeks.

What Counts As Qualifying Income

The CARES Act defines qualified income as:

Earned Income
Social Security Benefits
- A note on Social Security Benefits: According to this CNBC article, if you receive Social Security Benefits but don’t file an annual tax return, you are still eligible to receive the stimulus money.
Any compensation or pension received under chapter 11, chapter 13, or chapter 15 of title 38, United States Code

How Much Stimulus Money Will You Receive

Per the CARES Act, any individual with a qualified income of less than $75,000/year will receive a one-time payment of $1,200. Married couples filing jointly with a qualified income of less than $150,000/year will each receive a $1,200 payment. In addition, to these one-time payments, individuals and couples meeting the income limits will also receive a one-time payment of $500 for each child under the age of 16 years old.

If you have qualified income above the limits, you might still be eligible for a partial payment. See the infographic below.

Infographic credit: NPR

What You Should Do With Your Stimulus Check

So just what should you do with your stimulus check? In my opinion, unless you have an emergency fund that is fully funded, meaning at least 3 – 6 months’ worth of expenses (and preferably more) and you have a job that is in no way going to be affected by this situation, I think the absolute smartest thing you can do with that money is to SAVE IT.

Let me say that again. Save It, Save It, Save It. I know it’s not as exciting as putting it into the market or paying down debt, but there is too much uncertainty at this very moment to do anything other than hold onto that money. Depending on how long this global situation lasts, if you save the money now, the money might save you later.

Please keep in mind that I’m not a certified financial planner, analyst, advisor, or any of those things. That being said, I wholeheartedly believe that is what most people should do with the stimulus money.

Things To Consider If You’re Having Difficulty Paying For Essentials

During this time, there are a number of options you can do to conserve your money to ensure you have enough for the essentials.

Reduce or stop contributions to retirement and college accounts
Contact your mortgage company or landlord and ask if you can temporarily defer payments or make partial payments without penalty
Contact your credit cards and other lenders to see if you can defer payments without accruing interest
If you’re still working, consider applying for a HELOC to be able to access the equity in your home if the need arises
Withdraw contributed money from a Roth IRA without penalty
Withdraw or borrow money from your 401(k) – see CARES Act for provisions