Unless you’ve been living under a rock, the world is in a bit of a mess right now. The Covid-19 virus has pretty much brought the entire world to a screeching halt, and for most of us, we’re sheltering in place until it’s safe to go back to work, school, and our normal social lives. A lot of people and businesses are hurting right now, and the US government has taken action in the form of economic stimulus to do what it can to help. With millions furloughed or laid off, and 1/3 of Americans not paying rent last month, the government is stepping in with cash to hopefully help us weather this storm. 

There are tons of articles, tweets and noise about the stimulus, so you’re probably aware of what’ll be coming to your bank account very soon, but I thought I’d try to push through the noise and give you a quick summary of the personal stimulus, how it’ll work and how much it’ll be. I focused on young professionals and what we can expect. I got this information right from the US government website, and let’s jump in! 

How much will it be

I think I’ve already talked enough about what it is (cash money from the government to help), so let’s dive into how much it’ll be. The amount will vary based on your AGI, or adjusted gross income. Don’t confuse that for your gross income, the tax law here in the US allows you to deduct certain things like: certain retirement contributions, HSA deductions, moving expenses, losses from sale of property, student loan interest and a few other things. So! As you’re looking at the numbers, know that it’s looking at a lower number than your total income. You can find the AGI amount on your tax summary, likely in your TurboTax or H&R Block or whichever filing system you use.

This will be based on your 2019 tax return (assuming you’ve already filed), or you 2018 tax return if you haven’t filed yet. I did read that if when you file in 2019 your stimulus amount drastically changes, you won’t be penalized and have it taken back. 

Here’s how the numbers work – and I’m only showing head of household or married filing jointly as I assume most young professionals will fall into this bracket. I got this info from the Consumer Finance portion of the US government website so you can find other tax filing statuses if you don’t fall into those 2 buckets. 

Head of household

• AGI under $112,500 – get the full $1,200

• AGI $112,500 – $136,500 – your amount is reduced by $5 for each $100 over $112,500

• AGI over $136,500 – nothing 

Married filing jointly

• AGI under $150,000 – get the full $1,200 

• AGI $150,000 – $198,000 – your amount is reduced by $5 for each $100 over $150,000

• AGI over $198,000 – nothing

Also good to note that if you’re getting a check, you’ll also get $500 for any children under the age of 17. BabyMoneyFinance will get a portion too! 

Do I need to do anything? 

The good news is no! The US government is all over trying to get help out (pretty impressive response if you ask me) and we don’t have to do anything. Assuming you had a bank account listed for your 2018 or 2019 taxes, the money will automatically show up via direct deposit. No address updates if you’ve moved. If for some reason you didn’t file taxes in 2018/2019 or need to update the bank account where direct deposit will go to – the IRS has a section on their website to make that update. 

One other thing to do now – be wary of scams. As you can imagine, things are moving fast and furious with lots of money being moved around. Don’t fall victim to emails, phone calls or texts from the “IRS” asking you to click here to ‘confirm’ information. The IRS on that section I linked in the last paragraph does have a space where you can update payment info or check status. That should be your only communication with them. 

Is there a catch?

No! It almost seems too good to be true but this from all of my reading is a tax free tax credit coming your way. It won’t in any way affect your tax filing next April for 2020 taxes. Here’s the article I read confirming this – I was skeptical! 

When is it coming?

Based on everything I’ve read, it’s coming soon. I saw a news headline (for what it’s worth) that some folks area already starting to receive them. Your guess is as good as mine but I’m hoping for everyone’s sake its quick! 

What should I do with it? 

Now that’s the $1,200 question isn’t it. Honestly times are a bit rough right now, and even if you think you’re pretty safe and sound right now, things could change quickly. I’ve known a few friends that have gotten laid off already, and that really sucks. Please be smart and use that $1,200 wisely – if you don’t have an emergency fund, there you go, let that be your starting balance. Use it to pay rent, the mortgage, or for other bills. Use it to buy groceries or other necessities. There are weird, crazy, scary times and use this $1,200 or whatever amount you get wisely!