Dear Moneyist,
Last year, I made over $75,000 and reported that amount in my taxes for 2019. I realize that for millions of people around the world $75,000 is a lot of money. In my town, I’m lucky to get by on $75,000 a year.
If I lost my job due to the pandemic, but had over $75,000 in adjusted gross income last year, that means I won’t get any stimulus money. How can they go off of last year’s numbers when so many lives were affected THIS year?
That doesn’t sound ethical or reasonable to me.
Puzzled in Boston
Also see: Trump goes golfing as stimulus, defense spending bills left in the lurch
Dear Puzzled,
I remember a fateful day in elementary school when a boy was called out of class early, and another student asked the teacher, “Miss, how come he isn’t getting any homework and we have to do our homework? That’s not fair.” The teacher told the class, “Be grateful that you have a home and family to go home to tonight.” The boy’s parents were in a serious car accident. They survived, but barely.
I feel like that about people who have enough to get by during the pandemic, but lament the fairness of the system. Of course, we must question the system and call out inequality where we believe it exists. As the government dishes out the second round of economic impact payments, some people will have homes to return to and financial security, while others will be teetering on the edge.
You would get a check if you lost your job this year, filed your taxes last year and did not earn more than $75,000. But you are correct: You would NOT receive the check this year. It’s a blunt instrument. For those people who did not file their 2019 taxes by the time the first $2.2 trillion stimulus program was announced last March, the government used their 2018 tax returns.
The Internal Revenue Service does not have the manpower to individually to audit the more than 160 million Americans who are likely to qualify for a stimulus check. The IRS is a convenient source of data on the incomes of millions of Americans and, if people’s circumstances have deteriorated over the past 12 months, they will receive a stimulus in their 2020 tax return next year.
People who did not receive a check this year or only a small amount and believe their income will fall below the required threshold for checks next year could still receive a stimulus payment next year. The EIP is technically an advance payment of a tax credit on your 2020 return. The IRS is using 2019 tax returns to gauge people’s incomes; 2018 tax returns are used as a Plan B.
The Moneyist: I earned $100,000 in 2019, but far less in 2020. Why did I not get a stimulus check? How is that fair?
The latest $900 billion stimulus program, which will dish out checks of $600, half the amount allocated by the Trump administration in the first round of stimulus payments, is a bridge to put food on the table for millions of people, and help keep the economy afloat until the vaccination rates near herd immunity, according to Richard Moody, chief economist at Regions Financial.
“The pace of economic growth has clearly slowed, the questions now being the extent to which this is the case and how long this slowdown will persist,” he wrote in a note. Is it an artificial boost to an ailing economy? Yes. Is it a shot in the arm for millions of people who are one lost paycheck away from the street? Yes again. Will it work? Possibly. Maybe. Hopefully.
It didn’t seem reasonable to that boy in school that day, and it may not seem reasonable to you now. But for those who do not qualify for checks and are able to get by, there is a lot to be grateful for.
You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected]
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