Second stimulus check: Could you qualify for another IRS payment? What we know

In the next few weeks, the Senate and House are expected to approve a new coronavirus economic relief bill that could include a second stimulus check. While we’ve worked out a probable timeline for when people might receive an additional payment from the IRS, we’re still unsure who will receive it. There is no guarantee that those who got the full $1,200 benefit the first time around will be eligible for a new check or direct deposit payment this time.

White House economic advisor Larry Kudlow has said the second stimulus payment will focus on people who are jobless or have lower incomes, Fox Business reported. It’s unclear how that would be calculated.

Here’s everything we’ve heard so far about who may or may not be eligible for an extra economic stimulus payment. This story updates often in light of new developments.

Why do we keep hearing about a $40,000 cutoff?

This $40,000 figure you keep hearing about came from Senate Majority Leader and Kentucky Republican Mitch McConnell, who said on July 6, “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.” That was in response to a reporter’s question about the second stimulus check.

Nancy Pelosi, the House speaker and a California Democrat, questioned the 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.”

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 speculated 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.”

What are the major proposals? The big picture

We won’t know until another rescue bill is made official, but we can piece together some possibilities. The $40,000 annual income limit being tossed around is one of them, but others have surfaced over the months.

For example, the Heroes Act (PDF) passed by the House of Representatives in May proposes broad financial benefits to individuals, families and categories that were skipped by the first stimulus check (scroll down for the list of exclusions), including most college students and people who aren’t US citizens.

But the Heroes Act has been strenuously opposed by the Senate and President Donald Trump, who called it DOA. On the other end of the spectrum, 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.

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In making these decisions, the Senate and House will factor in economic data that is at best contradictory. The US economy added 4.8 million jobs in June (PDF), the Labor Department reported last week, as a result of every state reopening in some way. On July 9, however, the Labor Department reported (PDF) that for the 16th straight week, the number of US workers newly applying for unemployment insurance was above 1 million, with 1.3 million workers filing new state unemployment claims for the week ending July 4 — a sign that the US labor market is still shedding jobs. 

And with coronavirus rates now spiking across the US, governors are shutting businesses they had allowed to open just weeks before, threatening to set back new job gains.

Who could potentially qualify for a broad second stimulus payment?

• 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 a taxpayer’s parent.
• 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 (ITIN) instead of a Social Security number.

Who might not qualify for a second payment?

Based on speculation, there are some different ways exclusion from a potential second stimulus check could play out.

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.

Who isn’t eligible for 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 alien as defined by the US government

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. 

“As soon as the Senate gets back [from its current break], 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.

Legislators will have to work around several extended breaks when the Senate is not in session: a scheduled two-week recess until July 17 and its August recess, running from Aug. 10 to Sept. 7.

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.