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Friday, January 22, 2021

Second stimulus check eligibility: Status update on who would qualify for an extra payment


The proposals for who may or may not qualify for a second stimulus check are dizzying.

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Angela Lang

Senate Majority Leader Mitch McConnell said this week that the Senate will be “looking at another direct payment” when Congress reconvenes on Monday. It’s the closest to a commitment that McConnell has made in regards to a second stimulus check. How much money a new payment could bring is just one of the topics that will be on the table when the Washington lawmakers discuss another relief package. Part of the debate will center on who will be eligible for a second payment — and who won’t qualify.

Citing White House economic advisor Larry Kudlow, Fox Business reported last week that the second stimulus check will focus on people who have lower incomes or are jobless, but it’s still unknown how that would be determined exactly. So even if you received the first $1,200 stimulus check, there is no guarantee that you will be eligible for a second economic impact payment. 

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“Only a heartless person would deny that the tens of millions out of work, the millions of small businesses shut down, and the hospitals, schools and nursing homes facing enormous challenges need help,” Joshua Gotbaum, a guest scholar in economic studies at the public policy organization Brookings Institution, told this week. “In many cases only the nation’s federal government is in a position to provide help.”

Below, we’ve detailed everything that we know at this point. Note that this story updates often as we learn new information.

Second stimulus check qualification: Best case scenario

The broadest eligibility suggested so far comes from the Heroes Act (PDF) proposed by the House of Representatives in May. It has been strenuously opposed by the Senate and President Donald Trump, who called it DOA, but it can help frame the conversation about the upper limits of who might be able to receive a second stimulus check. Here’s who qualifies based on that proposal:

  • Individuals who made less than $99,000 according to the adjusted gross income from their 2018 or 2019 taxes (whichever was most recently filed).
  • College students, dependents over 17, disabled relatives and taxpayers’ parents.
  • Families of up to five people.
  • SSDI recipients.
  • People who aren’t US citizens and file tax returns, pay taxes and otherwise comply with federal tax law using an individual taxpayer identification number instead of a Social Security number.

These people might not qualify for a second payment

McConnell has said that if the Senate, which his Republican party controls, passes another relief bill that includes more stimulus checks, the focus will be narrow. Based on speculation, here’s who might not be eligible for a second stimulus check.

Nobody qualifies: A stimulus package could be signed into law that gives tax credits and other incentives to businesses. It’s possible some people could get a travel or dining credit, but not a check.

People who make “too much” money: If another round of stimulus payments does pass, but allocations are smaller for IRS payments, it’s probable there could be a lower maximum yearly income (AGI on the tax form) to qualify. In other words, people who make more than a certain amount (that’s lower than the current cutoff of $99,000 for individuals) could potentially be left out of a second round. One example is the $40,000 cap mentioned above.

Carryover exclusions from the current CARES Act: Young people between 18 and 24, people who aren’t US citizens but pay taxes, people who are incarcerated.

 cash funds running out of money change dollars wallet empty

It’ll soon become clear who can qualify for another stimulus check.

Sarah Tew

Who missed out on the first stimulus check

Let’s review who was excluded in the first round:

  • Single taxpayers with an adjusted gross income above $99,000
  • Heads of households with an AGI over $136,500
  • Married couples with an AGI over $198,000
  • Children over 16 and college students under age 24
  • Nonresident aliens, as defined by the US government

Is the $40,000 cutoff real and where did it come from?

It’s been suggested that the next stimulus check would only go out to people who make $40,000 a year or less. The supposed income limit — which is not final — came from remarks made by McConnell on July 6, who answered a reporter’s question about the second stimulus check by saying: “I think the people who have been hit the hardest are people who make about $40,000 a year or less. Many of them work in the hospitality industry. So that could well be a part of it.”

Nancy Pelosi, the House Speaker, questioned McConnell’s proposed salary cap. “I don’t know where the $40,000 came from,” she said during a July 9 press conference. “I think families making over $40,000 probably need assistance, depending on their situation.”

That figure doesn’t scale across all US markets. In San Francisco, for example, the US office of Housing and Urban Development defined “very low income limits” at $60,900 for a single earner and $87,000 for a family of four, based on 50% of the metro area’s median income in 2020. That would be well above any $40,000 cutoff.

It’s been suggested that the $40,000 figure McConnell cited came from an open letter published June 16 from over 150 economists, led by Ben Bernanke, the former chair of the Federal Reserve, which stated that “among people who were working in February, almost 40% (PDF) of those in households making less than $40,000 a year had lost a job in March.”

When will we know more about stimulus check qualifications?

We won’t know anything for sure until a stimulus bill comes into clearer focus, but we have a good idea when that might happen and when a check could be sent. The conversation is expected to start in earnest on Monday, July 20, when the Senate is back in session.

“As soon as the Senate gets back [from its current recess], we are going to sit down on a bipartisan basis with the Republicans and the Democrats,” Treasury Secretary Steven Mnuchin told CNBC on July 9. He added that it will be a priority for the next legislation to be passed between July 20 and the end of the month.

For more, here’s what we know about the major proposals for a second stimulus package. We also have information on unemployment insurance, what you can do if you’ve lost your job and what to know about evictions.

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