You may have heard that many Americans will be receiving a check for $1,200 as part of the recently passed $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. This cash payment is meant to help people make ends meet during the COVD-19 outbreak

It’s a time of great uncertainty. Americans are struggling to pay their rent and mortgages while navigating the frightening reality of weeks or months of pay cuts, furloughs, or unemployment. The check for $1,200 isn’t necessarily meant to kickstart your investment strategy; it’s meant to be spent on keeping food in your fridge, the lights on, and your bills paid. 

Here’s a quick guide to what you need to know about the checks and how much you can expect to receive from the Federal Government: 

How much can I expect to receive?

The massive federal relief bill offers direct cash payments of up to $1,200 for individuals and $2,400 for couples, with $500 added for every child. Treasury Secretary Steve Mnuchin said that eligible Americans should start receiving checks via direct deposit by mid-April. (You can read the analysis from the U.S. Committee on Finance here.)

How does the government know how much to send me?

The amount is based on 2019 tax returns. If you haven’t filed yet, it will be based on your 2018 information. The benefit begins to phase out for individuals making $75,000 in income and ends completely for those making $99,000 or more. 

The rebate decreases by $5 for every $100 by which a taxpayer exceeds the $75,000 threshold. For example: If you make $77,000, you can expect to receive $1,100. 

The support for married couples is calculated together. This means that a couple is eligible to receive $2,400 if their total income doesn’t exceed twice the number mentioned for a single person, i.e., it is not higher than $150,000. These checks will be paid out on a sliding scale if a couple earn between $150,000 – $198,000. The $500 for every child still stands.

For single parents or head of household, you’re eligible for $1,200 if you earn up to $112,500. The more you exceed that number, the less you can get, but this time the cap is $136,500.

Confused? You can use this calculator to see how much you can expect to receive. 

When will I get it? 

Here’s where things might get frustrating. On Tuesday, Treasury Secretary Mnuchin said that eligible Americans should start receiving checks via direct deposit by mid-April. For Americans without bank accounts or who don’t make enough to pay a Federal tax return, it could take weeks or months to receive paper checks. 
 

Do I have to sign up to receive it? 

No, eligible Americans will receive it via direct deposit or by mail. No need to sign up. The IRS has said that people who signed up for direct deposit for their 2018 or 2019 tax returns will automatically have the stimulus money placed in the same accounts. A check will be sent by mail to people who haven’t signed up for the service, but that could take longer, according to reports


If you haven’t filed a return for either 2018 or 2019, the IRS may urge taxpayers to file a simple form as soon as possible. (Social Security recipients will not be required to file a simple form to get their checks. Instead, payments will be automatically deposited into their accounts, or sent by paper check.) You can find out more about these things here

The U.S. Treasury also recently launched an online portal, where you can securely enter your bank account information for a direct payment. You can access it here.


Is this money taxed?

No, this money will not count toward your 2020 taxable income. 

What if I’m a freelancer or part of the “gig economy?”

The payments are based on your 2019 or 2018 tax returns. It doesn’t matter what you do for a living. 

What should I do with my check? 

The money is intended to help Americans out with basic bills and to help them make ends meet, says Douglas Boneparth, CFP, a financial advisor based in New York City.

“It’s tough because a person who makes $75,000 a year may have some savings to fall back on, while a person who makes $35,000 may not,” he says. “So that same check may mean different things to different people.” 

There are a few ways to use your check, there’s no one-size fits all advice.

“This money is meant to be used for groceries, rent, whatever you need to get by,” Boneparth adds. 

For example, if you’re got money stacking up on a high-interest credit card, your check can help you take the heat off. If you have enough of a cushion to get you through the next month or two, you can add it to your savings. 

“If you don’t need the money right now, you can put it toward a rainy day fund,” Boneparth says.

Remember, if you’re feeling pressure right now, you’re not alone. No one knows exactly how and when this will shake out but in the meantime, these checks are meant to ease your burden in the short term.