disruptpress efi
Personal finance

About 12 million adults may not receive those $1,400 stimulus checks. Here’s why

Signs calling for more relief, a second Paycheck Protection Program and more as part of a campaign by Goldman Sachs supporting small businesses near the U.S. Capitol on Jan. 5, 2021.

BRENDAN SMIALOWSKI | AFP | Getty Images

New $1,400 stimulus checks are set to go out once Washington lawmakers finalize a new coronavirus relief bill.

However, fewer people could see the money, based on reports that President Joe Biden has agreed to lower the income levels at which those payments are capped.

Like the previous two rounds of stimulus checks, full direct payments would go to individuals with adjusted gross income of up to $75,000, heads of household with up to $112,500 and married couples who file jointly with up to $150,000.

The new checks were set to be capped at $100,000 in income for individuals, $150,000 for heads of household and $200,000 for married couples, based on the bill the House of Representatives passed on Saturday.

More from Personal Finance:
$45 billion-plus in rental aid may be available. How to apply
Timing your tax return right could mean a bigger stimulus check
New relief bill could help keep seniors out of nursing homes

Now, that could all change, based on new terms set by the Senate that Biden has agreed to.

Instead, the payments would be capped for individuals earning $80,000, heads of household with $120,000 and married couples with $160,000.

Consequently, fewer Americans with incomes above the thresholds for the full payments will receive checks. Those who do will receive smaller sums based on the quicker phase out rate.

“It means less money in the hands of Americans,” said Aaron Klein, senior fellow in economic studies at the Brookings Institution.

“Ultimately, I think it’s a mistake,” Klein said.

If cutting the size of the $1.9 trillion bill is the goal, there are other areas like state and local aid that could be reduced, he said. Those areas have the capability of raising money in other ways, while Americans who are suffering during the Covid-19 pandemic may not.

“Ultimately, having a very steep and narrow phase-out rate like this translates into less money going to people, many of whom are in precarious financial positions,” Klein said.

An income of $80,000 per year can sound like a lot of money in some parts of the country, while it may be much less in other parts. That could explain why lawmakers are divided on the phase outs, Klein said.

It means less money in the hands of Americans.

Aaron Klein

Senior fellow, Brookings Institution

Biden’s move comes after a handful of Democratic senators this week sent him a letter calling for recurring stimulus checks and continued enhanced unemployment insurance.

In that letter, they pointed out that the stimulus checks can help where replace lost income where jobless benefits fall short.

“Direct payments are crucial for supporting struggling families who aren’t reached by unemployment insurance,” the senators wrote.

This is a developing story. Please check back for updates.

Products You May Like

Articles You May Like

A Small Change To The Federal Tax Code Could Greatly Benefit Cash-Short Retirees With No Loss Of Tax Revenue
Why Biden’s Infrastructure Plan Is Not The Answer To Long-Term Care Funding Needs
As pandemic aid was rushed to Main Street, criminals seized on Covid relief programs
Op-ed: Here’s how to reduce exposure to tax increases with charitable contributions
Fourth Class Action Suit Against Syndicated Conservation Easement Promoters

Leave a Reply

Your email address will not be published. Required fields are marked *