Americans have many questions as the second round of stimulus checks roll out because there’s been so much political back and forth surrounding the next round of payments.
Most households will receive $600 per person.
Wendy Barlin, a CPA and the woman behind the Los Angeles based business About Profit, which helps “small business owners keep more of their hard-earned money with tax strategies.”
“I think the issue that most people don’t seem to be realizing is that your eligibility for this is based on your 2019 tax return, which was a long time ago,” said Barlin.
Her clients, like the rest of us, have a lot of questions about that stimulus money. For a lot of people, $600 isn’t nearly enough for the amount of help needed.
“Absolutely if you are underwater and haven’t worked in a year, $600 is not going to help you,” Barlin said. “You need food. You need rental assistance.”
But, if you’ve got that covered, and you’ve been fortunate to work during the pandemic, the extra money is nice.
“There are a lot of people where $600 is extra for them, so they are still working,” Barlin said “$600 is going to be extra, and that’s going to be pretty great. Savings, credit card debt, charitable help especially at this time of the year, so I think it’s a broad spectrum of how people are going to benefit from the stimulus.”
She recommends paying down debt, among other things.
“Always food housing medical first once those are covered, then, given the climate,” Barlin said. “We have one of two excellent choices: Spend the money with small businesses who need you to do something nice for yourself and your family and the businesses that need you and or give some of it to those who truly need it- especially because charitable donations are tax-deductible.”
Where does that money come from? Many Americans face mounting debt, and many wonder if the extra cash comes with a hidden clause. The short answer? You don’t have to pay it back, and it’s not taxable.
“If you didn’t get it and you’re entitled to it as soon as you filed your tax return, you will get it it’s not taxable, and you do not need to pay it back. However, unemployment money is different because it’s taxable.”
She says, as soon as you file your 2020 return, you’ll get the money if you haven’t already.
Barlin thinks you may want to watch your mailbox because the IRS might send a debit card that could look like junk mail.
“Be prepared for the unexpected the next few months are going to be a roller coaster,” Barlin said. “I think there’s this optimism that once January 1st comes, a light will come on, and everything’s going to be better, and I’m an optimist, so I certainly hope that’s true. Still, I also believe we need to continue to take care of our money and our health and make plans for the new world we’re living in and not be waiting for some magic fix to happen.”
No one has a crystal ball for our future, but Barlin says to take the opportunity to make a positive financial or career change in your life if you’re able to.