The second round of stimulus checks may soon start arriving in bank accounts after President Donald Trump signed the $900 billion stimulus bill. The last-minute signing was a welcome development for the 6 in 10 people who have suffered a financial setback due to the pandemic, but millions of people may find themselves in for disappointment if they are among the groups who don't qualify for the payment.
It's most likely that the checks will amount to $600 for each adult and child, or half the amount of the $1,200 checks sent out earlier this year. The $600 per-person payments are part of the stimulus bill passed by Congress in December and signed by Mr. Trump on the evening of December 27.
Still, Mr. Trump and House Speaker Nancy Pelosi have called for lawmakers to boost the amount to $2,000 per adult — a request that Wall Street analysts say has a slim chance of moving forward, considering the additional hundreds of billions of dollars such a raise in the amount would cost.
In crafting the latest stimulus bill, lawmakers have sought to rectify a few issues that restricted payment of the first stimulus checks earlier this year. For instance, distribution of the second stimulus checks will include so-called "mixed-status" immigrant families, or families where American citizens are married to immigrants without Green Cards, a group that was blocked from receiving the checks earlier this year. Children under 17 years old will receive the same $600 payment as adults, compared with $500 in the first round.
"Children will be eligible for the same benefit amount as eligible adults, and families with members of mixed immigration status with a valid Social Security number for one spouse are also eligible for the payments, unlike with the CARES Act rebates," noted the Tax Foundation.
However, the income limits in the most recent stimulus package are slightly different from the Coronavirus Aid, Relief, and Economic Security Act (or the CARES Act), which will cut off more middle-class families from receiving aid. And there are a few groups who were overlooked in the first round of checks who will also miss out on a second check.
Chief among them: Child dependents who are 17 years old and adults who are claimed as dependents on another person's tax return, such as is typical with college students.
Below are the groups of people who won't receive a $600 check in the second round.
Child dependents who are 17 years old
The $900 billion stimulus package directs $600 to each child in a family — as long as they are considered "qualifying children" under the IRS tax code for the Child Tax Credit. Unfortunately for parents of older teens, the tax code defines "qualifying children" as those who haven't yet hit their 17th birthday.
In other words, the $600 will be directed to children ages 16 or younger.
The IRS will use people's 2019 tax returns to determine their stimulus payments, which means that teens who hit their 17th birthday in the second half of 2020 — after tax returns were due to the IRS — could still qualify.
Adult dependents, from college students to seniors
No adult dependents will qualify for the $600 checks, according to the Tax Foundation.
This means that most college students, who are typically claimed as dependents by their parents, won't qualify for the checks. That rankled some college students, who expressed their frustration on social media. Many are struggling with a range of issues in the pandemic, from food insecurity to lost income from campus jobs that were curtailed because of COVID-19 restrictions.
Older adults, from seniors to disabled individuals, who are claimed as dependents are also excluded, an issue that some on social media called "a slap in the face."
Disabled adults and seniors who are claimed as dependents often face higher costs due to issues such as higher medical expenses.
Single people earning over $87,000
The second round of checks will have the same type of income phaseouts as in the CARES Act, with the stimulus check payments reduced for earnings above $75,000 per single person or $150,000 per married couple.
The amount of payment individuals receive will be reduced by $5 for every $100 of income earned above those thresholds, according to the House Appropriations committee.
But that formula, when combined with the smaller, $600 amount of the checks, means that the income threshold for receiving any money will be lower: Single people earning over $87,000 won't qualify — compared with the phaseout threshold of $99,000 for single filers in the CARES Act.
Married couples earning over $174,000
For a similar reason, married couples will face a lower income threshold for receiving the $600 checks. Any couples earning over $174,000 won't get a payment, down from $198,000 in the CARES Act.
Overall, almost everyone in the bottom 80% of the income distribution in the U.S. will receive a check, according to the Tax Foundation's estimate. The share of filers who will receive a check dwindles for people whose incomes place them in the top 20% of earners, with very few taxpayers in the top 5% qualifying, the Tax Foundation estimated.
Of course, even if they don't receive the $600 themselves, single people and couples with incomes above those thresholds would still receive payments for their children, as long as those children are under 17.
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