CARES Act Stimulus - What You Need to Know

Howard Morin |

In response to the Coronavirus (COVID-19) pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. At a cost of $2 trillion, the White House stated that it’s ”the single-biggest economic relief package in American history.”

The CARES Act is 335 pages long, and includes key emergency measures to help hospitals, local governments, small businesses, and more. Individuals and families are also assisted directly through one-time stimulus checks.


1. Who qualifies for a stimulus check?

2. What size check can I expect?

3. How do I receive a stimulus check?

4. When will I receive my stimulus check?

5. What should I do with my stimulus check?


Who qualifies for a stimulus check?

The good news is that an estimated 94% of taxpayers will be eligible for a stimulus check of some amount. Anyone is eligible if they meet all of the following criteria.

- You must be a U.S. citizen/legal resident.

- You must have a work-eligible Social Security number.

- You cannot be a dependent of another taxpayer.


What size check can I expect?

The stimulus checks are in the amount of either $1,200 for individuals, or $2,400 for couples filing a joint tax return. In addition, an extra $500 is added for each child under the age of 17.

For example, if you are married with one child, your stimulus check would be $2,900 ($2,400 + $500).

However, your stimulus check will be reduced—or even eliminated completely—if your Adjusted Gross Income (AGI) is above the following thresholds, based on your tax filing status:

- Married Filing Jointly: $150,000

- Head of Household: $112,500

- All Other Filers: $75,000

Additionally, for every $100 that your AGI is over the above thresholds, your stimulus check will be reduced by $5.

The graph below illustrates the size of stimulus checks for various tax filing statuses and family sizes.


CARES Act Stimulus Checks

If you have already filed your 2019 taxes, the IRS will look at how you filed to determine the amount of your check. This includes your AGI, whether or not you’re a dependent of another taxpayer, and the age of your dependents. If you have not already filed your 2019 taxes, the IRS will look at your 2018 tax return instead. 

- If your stimulus check would be more favorable based on your 2018 tax return, you may want to wait to file your 2019 return until after you’ve received your stimulus check—and keep in mind that you have until July 15th of this year to file.

- If your stimulus check would be more favorable based on your 2019 return, you may want to file for 2019 as soon as possible—and keep in mind that if you file, you still have the option to defer payment until July 15th.

- If you have not filed either your 2018 or 2019 tax return, you may want to consider filing for whichever tax year is more favorable.

Consider reviewing additional combinations of marital status, income, dependent status of filer, and age of dependents claimed for both 2018, 2019, and 2020 tax years, and use a tax professional to help determine whether to accelerate or defer a 2018 or 2019 tax filing.

If you don’t qualify for the most favorable stimulus amount based on either your 2018 or 2019 tax return, you could claim a credit for the difference on your 2020 return when you file if your situation changes and you then qualify for a greater amount. Examples of life changes that could cause this to happen include a lowered income, having a child, getting married, getting divorced, etc.


How do I receive a stimulus check?

Most Americans won’t have to do anything to receive their stimulus check. This is because the CARES Act authorizes the IRS to electronically disburse the payments via direct deposit. Over 90% of taxpayers e-file their tax returns, so the IRS likely already has your bank account information. 

If you haven’t filed a tax return recently, you will need to file a simple tax return in order to receive your check—even if you normally do not file. The checks will be available throughout the rest of the year in case you need additional time.

The IRS has created a web page dedicated solely to issues related to Coronavirus. If your bank account information has changed or you have any concerns about receiving your check, we suggest that you bookmark the page and check back periodically for further instructions.


When will I receive my stimulus check?

The CARES Act states that the IRS shall process these stimulus checks as rapidly as possible. That being said, it will likely be 3 weeks or more until people see the money in their accounts.

For individuals who have not e-filed their tax return, or haven’t filed yet at all, it will likely take even longer.


What should I do with my stimulus check?

For many Americans, especially the record 3.3 million who have recently filed for unemployment, the importance of these stimulus checks cannot be understated.

We are getting many questions from clients and the general public on how to best prioritize the use of these stimulus checks. In these uncertain times, it’s more important than ever to make sure you’re being smart and making the most of your money. Here is some general guidance in priority order on what you can do with your stimulus check - 

1. Leave it in Your Checking Account: Cover your necessities first. We usually recommend having 1-2 months worth of expenses in your checking account for quick and easy access. In times like this, it may be a good idea to keep an additional month worth of expenses.

2. Make Minimum Debt Payments or Pay Bills: Stay current on your bills. Missing payments can rack up fees and damage your credit. If money is tight, contact the companies you do business with as soon as possible to see if any payment options are available. Many businesses are offering flexibility with payments, such as mortgage providers, energy companies, student loan servicers, and more.

3. Pay Down/Off High-Interest Debt: Put your stimulus money towards high-interest debt such as credit cards. Reducing or even eliminating high-interest debt can help you reduce your monthly expenses. In tough times that's incredibly valuable.

4. Expand Your Emergency Fund: Above and beyond your checking account balance, we recommend having 3 to 6 months of expenses set aside in a separate savings account for an emergency fund. This bucket of money should be held in a liquid cash account or very conservative investment portfolio.

5. Fund Your Retirement: Put any extra money towards your retirement. Investing during times like this can be scary. Remember markets go up and down so make sure you invest at a risk level you’re comfortable with. Also, don’t let short-term panic distract you from your long-term goals.

Another idea if you are fortunate enough, is to donate some or even all of your check to family, neighbors, or friends in need. The New York Times has a list of charities focused on coronavirus aid and relief. You can also consider dedicating some of your stimulus funds towards locally-owned small businesses and restaurants who are especially affected by the outbreak.

Looking Forward

We don't know when this crisis will be over. No one has a crystal ball. It might be difficult to see the positive or bright side of things right now, but that’s what we choose to do. We are seeing incredible teamwork and generosity everyday in this country. Americans everywhere are lending a helping hand. We have been though 33 economic downturns in our history, only to come back stronger from every one. We strongly feel this time will be no different.


*Sources -;;; Betterment; Nick Holeman, CFP;