By now I’m sure you’ve heard that qualifying US taxpayers will be receiving a stimulus check, or what’s technically called your economic impact payment. If not, here’s what the IRS wants you to know. Beyond that, keep reading for a few tips on how to best make use of the funds once you receive them.
When should I get my check?
Per the US Treasury department and the IRS, economic impact payments are expected to begin going out mid-April. As of right now, you do not need to do anything else to get payment as long as you filed a tax return in 2018 or 2019 (if not, check out this flyer from the IRS). And remember, if you get a call asking you to make changes it’s a scam.
If your tax return included banking information for payment of taxes due or to direct deposit your refund, the IRS will send your stimulus check to you that way. If it did not, then you’ll receive a check. The IRS has also said there will be an opportunity to provide updated banking information, but the format is still to be determined as of the publishing of this post. We do know for sure that the IRS will be sending a follow-up letter advising you that the payment was sent, so that if for some reason you don’t get it, you’ll know to take action.
The best place to learn more about this is on the IRS website specific to these payments here, but the bottom line is: you don’t need to take action at this time to receive a check if you are up-to-date on your tax filings. Check out our stimulus check article to see if you qualify and to learn details of taxation.
What can I do with these checks?
Almost anything! They are being sent to make sure everyone can cover their essentials and possibly push cash back into the economy. While there are no restrictions on what you can use the funds for, we do have some suggestions on how to spend those checks.
If you’ve already lost income
If you are one of the 10 million Americans who have lost their income due to COVID-19 related changes, how do you make the most of this one-time payment? Here’s what we suggest:
- Use the stimulus check to bridge the gap between your last paycheck and when unemployment kicks in (haven’t applied for unemployment? Check out this article about next steps).
- Know your rights. Set up a Google Alert for your town, county and state. What are the rules on collections and evictions? Know what the rules are before using funds on something that has leeway. Keep in mind these are rapidly changing.
- Contact your creditors to see if they will offer relief for debt payments; don’t ignore your bills, but work with them to see what flexibility they will offer. Make sure to ask about any fees that may apply. Check out this toolkit to prioritize bills.
If your income is not secure
Maybe you’ve lost a portion of your income or perhaps you are waiting to hear about a possible furlough. Let’s make sure you are taking care of yourself first and foremost.
- Start with a hard look at your budget. What are your needs, what are your wants, and what are extras? Start living on that budget now.
- Save any extra money and put it into your emergency fund. Check bankrate.com to make sure you are getting the highest interest rate on your savings.
- Create a debt inventory, and prioritize debts based off flexibility. Focus on paying debts that have the least wiggle room.
- If you have income still, continue to make contributions as able to your retirement account to get the full employer match. Keep your eye on the prize long term.
If your income is secure
Wonderful! Let’s do a spot check to make sure that you are in a good place. How can you make the most of this money?
- Do you have a robust emergency fund? Ideally, this is 3-6 months of spending. If your income stopped tomorrow could you go three months with no changes to your spending?
- What debt do you have? Make a list of what you owe, interest rates and minimum payments.
- Are you maxing to the match on your retirement plan? It’s free money, make sure that you are getting it from your employer.
- Have you funded a Roth or traditional IRA? Due to the tax deadline extension, you have until July 15th to max out your 2019 IRA or Roth IRA contribution. If you haven’t done it, you still have time!
- Have you funded your HSA? Same goes for your HSA, you have until July 15th to make the maximum contribution.
- If you have all your ducks in a row, help where you can, such as buying gift cards to small and local business to help support them while we are all home. If you are comfortable, get touchless take out.
- Donate. If you truly don’t need the money, consider donating it to a worthy cause. Keep in mind that charitable donations can be tax deductible.
Lastly, stimulus check or not, take some time to take care of yourself. Watch a cat video, play a video game or take a walk. And of course, wash your hands.