Personal Finance

Coronavirus stimulus paychecks are on their way. But there may be kinks for some Americans

Key Points
  • Congress has given final approval to a $2 trillion stimulus bill that gives the government the green light to send stimulus checks to Americans.
  • If  you just ran into financial hardship due to the coronavirus, you might not be eligible for immediate relief if your past tax returns show income that is too high. Plus, your contact information may be out of date.
  • Use this calculator to determine how much you might get.
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Congress has passed a $2 trillion coronavirus stimulus bill, and you're probably already counting up the money you could receive in relief checks — if you're eligible.

Generally, individuals who earn $75,000 or less qualify for $1,200 one-time payments, while couples making $150,000 or less may receive $2,400. Dependent children are eligible for $500 each.

But beware: There are caveats in the legislation that could make it harder for you to get the relief you need if your financial circumstances have recently changed.

That's because the stimulus checks will go out based on your adjusted gross income for the 2019 tax year, if you have already filed your return. If not, the Treasury Department will use your 2018 return.

That may be little comfort to you if you earned above those thresholds in 2018 or 2019 and your work has suddenly disappeared because you have been furloughed or laid off.

This week, unemployment filings surged to a record 3.28 million.

"It's based on prior years' incomes that may have nothing to do with their current situation," said Jeffrey Levine, director of advanced planning at Buckingham Wealth Partners in Long Island, New York. "It's a real issue."

Any additional money someone is entitled to will eventually come to them when they file their 2020 tax return in the form of a credit against taxes owed. But those filings aren't due until next year.

"When you're desperate for cash now, it does you no good to tell you, 'Well, don't worry, when you file your return next April, you'll get it back,'" Levine said.

The legislation calls for sending those payments electronically to the same accounts you authorized for previous refunds. But there's a problem if you have closed that account since your last tax return.

If that information is not on file, a check will be mailed to you. But your mailing address on file might not be current, either.

House passes $2 trillion coronavirus aid bill
House passes $2 trillion coronavirus aid bill

Working through those issues could delay how quickly you receive the funds.

In fact, some individuals may need to file a return in order to get a stimulus check, according to Jack Smalligan, senior policy fellow at the Urban Institute, a non-partisan think tank.

That goes particularly for low-wage workers or individuals with no income who haven't filed returns, he said. The Treasury Department may ask those individuals to fill out a 1040-EZ form, even though they have no obligation to do so, in order to process their information.

"I think that Treasury is going to have to opine on this pretty quickly," Smalligan said. "I would hope that we would get something from them next week."

More from Personal Finance:
People on Social Security eligible for one-time stimulus payment
Congress passes plan to send taxpayers $1,200 checks in aid
Here's what you should do with your coronavirus rescue check

One way to make sure your contact information is up to date is to file your 2019 tax return, if you haven't already.

If you had a life-changing event since your 2018 tax return – such as lower income that would put you in the qualifying thresholds or a new child – you should try to get your tax return in as soon as possible, Levine said.

That holds even though the IRS has extended the deadline to file your taxes until July 15.

Any money you receive will not be considered taxable as the IRS considers it a credit, or money you've already paid that they're giving back to you.

One bright spot for taxpayers: If your income was low in 2019, but high in 2020, your stimulus tax rebate won't be clawed back when you file next year, according to Levine.