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Second Stimulus Payments: Your 10 Most Important Questions Answered
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Second Stimulus Payments: Your 10 Most Important Questions Answered

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There's little question that 2020 has been one of the most challenging years on record for America. The coronavirus disease 2019 (COVID-19) pandemic has exacted an incredible physical and financial toll. More than 136,000 people have passed away from COVID-19 as of Tuesday, July 14, and more than 20 million people have lost their jobs, if at least temporarily.

With no modern-era precedence to such disruption, lawmakers could think of no better way to fight back than to throw an epic amount of money at the problem. Thus, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was born.

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The CARES Act threw a record amount of cash at an unprecedented problem

At $2.2 trillion, the CARES Act was the priciest piece of relief legislation ever signed into law in Washington. It provided funding for hospitals to combat COVID-19, offered up loans to small businesses, provided capital to distressed industries, and enhanced the unemployment benefits program for a period of four months (April through July).

But what the vast majority of Americans will remember the CARES Act for is supplying over 160 million taxpayers with a direct stimulus payment. These Economic Impact Payments, as they're officially known, could total as much as $1,200 per individual or $2,400 for couples filing jointly, with a parent or household eligible for $500 extra for each dependent under the age of 17.

While this stimulus money was very much needed given the gravity of the situation, the fact remains that CARES Act stimulus funds didn't go very far. An April survey of 2,200 people from Money/Morning Consult found that almost half of the recipients had spent or intended to spend their stimulus money in two weeks or less, with 74% burning through their Economic Impact Payment in four weeks or less.

Without question, additional financial assistance is needed, and Congress appears to be working on that right now.

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Answers to the most pressing second-stimulus proposal questions

However, there are a boatload of questions concerning this second round of stimulus payments and what they might entail. While we don't have all the answers yet, here are some of the facts and/or clues we've been given to the 10 most asked questions.

1. Will there be a direct stimulus payment in the next package?

Although nothing is set in stone or even put on paper as of yet, the growing consensus is that there'll be some form of direct-stimulus component in the next proposal.

For those of you who might recall, the HEROES Act, which the Democrat-led House of Representatives passed on May 15, called for another round of direct payouts to Americans. In recent weeks, President Donald Trump, Senate Majority Leader Mitch McConnell (R-Ky.), and Treasury Secretary Steven Mnuchin, have all echoed this sentiment that another round of funding is needed, and it should involve putting money directly into the hands of Americans.

2. How much stimulus money can people expect to receive?

We don't know, exactly. The HEROES Act called for payments of $1,200 per individual and $2,400 for couples, which would have mirrored the payments for the CARES Act. Of course, the HEROES Act also beefed up the extra payout for dependents to $1,200 (limit three) from $500.

By comparison, President Trump noted in a recent interview with Fox Business Network's Blake Burman that he supported "larger numbers than the Democrats, but it's got to be done properly." It remains to be seen if Trump and Republicans produce a bill that leads to higher stimulus payouts than were disbursed with the CARES Act.

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3. Will there be different income-qualifying thresholds from the CARES Act?

Interestingly, the HEROES Act called for the qualifying income thresholds to remain the same as under the CARES Act. This meant single, head-of-household, and married tax filers with adjusted gross income (AGI) below $75,000, $112,500, and $150,000, respectively, would net the maximum payout, while those with respective AGIs above $99,000, $136,500, and $198,000 would be phased out completely.

The expectation is that the GOP will push for a tighter qualifying threshold. While speaking at an event in his home state of Kentucky, McConnell off-the-cuff suggested that people earning under $40,000 annually are those being adversely affected by COVID-19. This is by no means a concrete figure put forth by the collective GOP, but it suggests a battle may be brewing between Democrats and Republicans over the qualifying-income threshold.

4. Will more people qualify as dependents?

Under the HEROES Act, Democrats removed the age limits tied to dependents. As noted, the CARES Act only allowed dependents aged 16 and under to provide a parent or household with added funds. Democrats clearly want to see more folks qualifying under the next round of stimulus.

There hasn't been any specific pushback on this idea from the GOP, and it could prove a point of compromise in the next round of stimulus.

5. Can senior citizens expect another round of stimulus?

There's been nothing proposed by either Democrats or Republicans that would suggest senior citizens and/or those receiving Social Security or Supplemental Security Income would be excluded from the next round of stimulus. Just as most seniors (i.e., those who aren't being claimed as dependents by a family member or friend) received an Economic Impact Payment under the CARES Act, they look to be in line to receive more money under stimulus proposal 2.0.

Image source: Getty Images.

6. How will this stimulus money be delivered?

Getting stimulus money to folks under the CARES Act worked pretty well for about 80 million folks but was sort of a mess for the other 80-plus million who received or are still awaiting payment. Assuming there is, indeed, a direct-payment component, the next round of payouts should almost exclusively be delivered via direct deposit. Those who continue to prefer a paper check may wind up receiving a prepaid debit card, instead. Whatever method regulators decide on, it should be almost universally quicker than under the CARES Act.

7. When will people begin receiving these payouts?

Obviously, this answer depends on how quickly lawmakers can pass another stimulus bill and when President Trump signs it. The expectation is that it'll take a good three weeks, give or take a week, before payout logistics are resolved and payments begin heading out to Americans after the bill is signed into law. Thus, mid-August to early September would be the likeliest target period for those with direct-deposit information on file with the Internal Revenue Service.

8. Will enhanced unemployment benefits be extended?

The debate over enhanced unemployment benefits -- i.e., the extra $600 a week given to approved unemployed beneficiaries -- is easily the biggest hurdle that Democrats and Republicans will have to overcome. Democrats want this key benefit extended (it's set to expire on July 31, 2020), whereas Republicans believe it to be a disincentive to get back to work.

According to recent comments from Steven Mnuchin, the current form of enhanced unemployment benefits will not be extended. Rather, the GOP is seeking a dynamic extra payment that will ensure no unemployed person earns more per week than they would while working. Thus, it sounds like there will be an extension or sorts, just not at $600 per week for a vast majority of people.

Image source: Getty Images.

9. What else will be included, other than direct payments?

As noted, the CARES Act did a lot more than just give Americans and seniors a payout. It provided money to hospitals, bailed out distressed industries, and offered small businesses loans to keep them from having to let go off their employees. While a second stimulus bill is unlikely to include funding for distressed industries, another round of payment protection program funding (i.e., small business loans) is probably in the cards.

We may also see additional funding set aside for hospitals and COVID-19 testing.

10. How long does Congress have to pass a second stimulus bill?

Lawmakers certainly don't have a lot of time to hash out their differences on the next stimulus proposal. The Senate is due back from a two-week planned hiatus on July 20, with the Senators headed back to a month-long break from August 10 through Labor Day, on Sept. 7, 2020. This means lawmakers have between July 20 and August 7 to propose, debate, and pass a second stimulus bill. Otherwise, discussions won't begin again until after Labor Day.

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