A stimulus check is a lump sum of money given from the US government to every eligible citizen. The intention is to boost the spending power of citizens which should, in turn, boost the economy.
Stimulus checks are normally part of a wider stimulus package rolled out by the government to boost the financial health of the country.
Adding to an individual’s disposable income renders them more likely to spend, especially as they have not earned the money themselves.
Key Points: How to Define Stimulus Check
- A stimulus check is a lump sum of money given by the government to eligible citizens, to stimulate spending in order to boost the economy.
- Stimulus checks have been used in the midst of financial crises, such as in 2008 when $120 million worth of checks were rolled out.
- Covid-19 also incited the use of stimulus checks. This round of financing was first approved in March 2020.
- How much you’re eligible for is based upon how many people you’re financially supporting and your tax paying history, among other factors.
- In most cases, your check will automatically be sent to you if you’re eligible.
When Have Stimulus Checks Been Used In The Past?
Stimulus checks have been used by many past governments. Famously, in trying to curb the crisis of 2008, the Bush Administration issued stimulus checks totalling $120 million as one element of the Economic Stimulus Act.
More recently, the Covid-19 crisis prompted the US government to provide three rounds of stimulus checks to relieve the financial stresses pervading day-to-day life. This was first approved in March 2020, with the third round occurring one year later, providing $1,400 to those earning $75,000 or less per year.
How Do I Determine How Much I’m Eligible For?
If you are eligible, the amount you are entitled to via a stimulus check rests on a number of factors:
1. The number of people your check is supporting. If you have more people in your household, you will likely be entitled to a more generous check.
2. Your past tax repayments. If you have failed to pay off your taxes in the past, it is likely that the balance you are supposed to receive via your stimulus check will instead be deducted and put towards paying your taxes.
3. How you pay your taxes. If you pay your taxes jointly, you could be the recipient of a larger stimulus. If you file them individually, you will be qualify for less.
How Do I Receive My Stimulus Check?
For American taxpayers, your check will automatically be sent to you, should you be eligible. The amount you are entitled to will be calculated for you, so there is no need to try and calculate it yourself.
If, on the other hand, you are not personally required to file taxes, you need to need to input your payment on the Internal Revenue Service website as a ‘non-filer’ (https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here).
What Are The Disadvantages Of A Stimulus Check?
With regard to the economy, stimulus checks are known to widen the deficit, as it means that the government is spending more in an attempt to boost the economy.
Additionally, the expectation of a stimulus check can make consumers vulnerable to scammers to prey on recipients. During the Covid-19 rounds of stimulus checks being circulated, there was a correlative trend of scammers sending links to Americans inviting them to click on a link to receive their stimulus funds.
As a result, those who clicked on the link had personal details phished, and some even had money stolen from them. Make sure to only engage with official web pages and telephone numbers when dealing with stimulus checks.
What Are Stimulus Checks Spent On?
It’s mostly up to you! Typically, checks are put towards paying off bills, put into a savings account, used to pay off debt, or invested to generate further money.
For people who felt financially worse off during the covid pandemic, the stimulus cheques offered a very valuable injection of income, especially for those who could not borrow money now, because of a lack of income or work during the pandemic.
Many people choose to save their money during rounds of stimulus as they often take place during economic downturns. If this is the case, like it was during the Coronavirus Pandemic, then it is difficult to forecast what your income will be in the immediate, near and distant future. Given this, it may be useful to create a reserve you can turn to should you need it.