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A Second Round of Stimulus Checks Are Coming for Americans: The Rundown Thumbnail

A Second Round of Stimulus Checks Are Coming for Americans: The Rundown


About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area, that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual fiduciary financial planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 


Nearly a year into the pandemic, individuals everywhere are experiencing emotional, physical, and economical implications. In an effort to ease the pandemic’s detrimental effects, the federal government has recently passed a second stimulus package as part of the larger National Defense Authorization Act.

Eligible individuals and families will receive stimulus checks up to $600 per person. As a reminder, here’s what you need to know about your second stimulus check. 

The Rundown on Stimulus Checks: Your Questions Answered

Just as before, taxpayers who qualify will receive a direct deposit of up to $600, and couples will receive $1,200. In addition, families will receive $600 per child under the age of 17. The payment will begin to phase out for individuals with a 2018 or 2019 adjusted gross income of $75,000, couples with a $150,000 income, and head of households with a $112,500 income.1

Important to note is that the initial amount paid will be based on either a taxpayer’s 2018 or 2019 income tax return (whichever is the latest return that the IRS has on file), but it will ultimately be ‘trued up’ if a taxpayer is owed money based on their actual 2020 income. In other words, taxpayers will be given an estimated amount based on their 2019 incomes, but could end up getting even more (albeit later) if their 2020 return shows they made less money than they made in the previous year.

How Does the Phase-Out Work?

Individuals who make under $75,000 and couples who make under $150,000 are eligible for the full stimulus check.

For taxpayers with higher income, the amount is reduced by $5 for each $100 above $75,000, or $150,000 for couples - up to $87,000 or $174,000. This means that individuals with an income higher than $87,000 are not eligible to receive a stimulus check and neither are joint filers with an income over $174,000.1

Are Noncitizens Eligible?

Back in March, the CARES Act did not allow families of mixed-status to receive a stimulus check. This refers to households in which a U.S. citizen is married to a noncitizen. In the new package, however, both the U.S. citizen and their non-citizen spouse are eligible to receive a stimulus check.2

How Will I Receive My Payment?

The IRS will use information from 2019 tax returns to calculate your payment amount and will send the payment to the bank account listed on the return.2 

What if the IRS Does Not Have My Direct Deposit Information?

The IRS has created an online portal, called Get My Payment, where individuals can check the status of their stimulus check and learn what information the government may still need in order to issue a check. According to the IRS, this portal will provide important information including your payment status, payment type, and whether additional information (including bank account information) is required.

If I Usually Do Not File a Tax Return, How Can I Receive a Check? 

Those who usually do not file a tax return, including low-income taxpayers, senior citizens, and Social Security recipients, will need to file a simple tax return (but still will not owe tax) in order to receive their check. The IRS has created a special page dedicated to the Coronavirus and will be updating it with the next steps on how to do this soon. 

What Is the Difference Between a Stimulus Check and a Tax Credit?

The stimulus check is the same as a tax credit, and it is specifically an advanced refundable tax credit, meaning it is a refund allotted to you and is also sent in advance of the 2020 tax return.3 A refundable tax credit differs from a nonrefundable credit, which only applies to the amount of taxes you owe and is not available as a refund to you otherwise.3

Is the Stimulus Check Taxable?

Since the stimulus check is a tax credit, it is not income and therefore is not taxable.

If you received a stimulus check following the initial CARES Act last March, it’s likely you can expect to receive another stimulus check in the coming weeks. And for some families, changes made to this round of stimulus payments will offer more inclusion than before. As with anything related to the current pandemic, do not hesitate to reach out if you have a question regarding your stimulus check or what to do with it.

Dream Financial Planning Process ™

Whether you're managing student loan debt, starting a family, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals in their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. If you're looking for guidance on Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments, we can help.

Complimentary Consultation

With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.

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  1. https://www.congress.gov/bill/116th-congress/house-bill/6395
  2. https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
  3. https://crsreports.congress.gov/product/pdf/IN/IN11247

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