A volunteer loads groceries into a car at a food bank in La Grange, Ky., on April 13, 2020. (Bryan Woolston/Reuters)
The U.S. government has started sending $1,200 checks to Americans to help ease the financial pain caused by shutting down the economy to fight the deadly coronavirus. By Wednesday, 80 million people are expected to receive a direct deposit in their bank account, Treasury Secretary Steven Mnuchin said.
The checks are the centerpiece of the U.S. government’s economic relief package, and many Americans have taken to social media to celebrate the arrival of the money by posting photos of the money hitting their bank account. Singles earning up to $75,000 a year receive a payment of $1,200. Married couples earning up to $150,000 a year receive a payment of $2,400. Parents receive an additional $500 for each child under 17.
Early evidence indicates Americans are using the money to buy the basics, including food and gas.
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Netspend, which processed nearly $1 billion in relief payments by Monday, said its customers are using the government money “for groceries, fast food, pharmacies and gas, as well as withdrawing cash from ATMs.” More than half of the transactions were PIN-based at ATMs or grocery stores, and about a quarter were done online.
Daniel Ruffner received his payment Friday night on his Netspend prepaid debit card. It was a huge relief, as he’s out of work. He is a cook at a restaurant that’s currently closed at a popular Upstate New York campsite. He used some of the $1,200 money to buy groceries and pay the heating and Internet bills. The rest is going toward rent.
“I’ve just been stocking up on food and paying all of the bills. It’s nice to finally be able to see my bills go to zero,” said Ruffner, who lives in Rochester and takes care of his mother and son.
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Some Americans such as Camilla Chavez of Delaware say their check is “pending” in their bank account. Chavez banks with a credit union and saw the pending notice Sunday. Although the government sent the money out Friday, many banks needed three business days to process the checks, which is why millions of Americans will have the money available in their bank accounts Wednesday.
About 125 million Americans are expected to receive the one-time payment. The first wave of recipients includes mainly people who filed a 2018 or 2019 tax return and gave the Internal Revenue Service (IRS) their direct deposit information.
The IRS plans to have a “Get My Payment” website running by the end of the week where people can check the status of their payment if they have not received it and input their direct deposit information. Seniors and disabled Americans on Social Security will automatically receive the checks in the coming weeks. Other low-income Americans who do not normally file a tax return need to input their basic information on a new website the IRS set up. It will take time for the IRS to send people checks in the mail who do not have their direct deposit information on file with the government.
[IRS is launching a new online tool for people to track their $1,200 tax stimulus payments]
On Twitter, people said they plan to spend the money on everything from paying credit card bills and child support to buying wish list items such as shoes and video games. The last time the government sent most Americans checks was 2008, when it took months to dispense the funds. This time most of the payments are hitting bank accounts in 2.5 weeks.
Financial planners have urged people to use the money to buy basic necessities or pay off debt, which should help relieve pressure if someone loses a job.
In the past three weeks, nearly 17 million Americans have applied for unemployment. Economists say the nation’s unemployment rate is likely to hit 15 percent this month, the worst since the Great Depression era.
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Chavez is one of the millions who lost their job. She worked at an outlet mall near Rehoboth Beach, Del. The mall shut quickly after President Trump announced March 16 that it wasn’t safe for more than 10 people to gather. The past month has been a huge strain on her and her parents. Her mother tested positive for covid-19, the disease caused by the novel coronavirus, so both of her parents have stopped working, as well.
“Losing my job and not working for four weeks now has put me in a position where I had to use my savings and put charges on my credit card,” Chavez said. “This really put me in a tough situation.”
Chavez, 22, bought her parents groceries and left them at their door, so they would not have to leave their home. Her mother is improving, but the family remains careful. Chavez applied for unemployment but was denied. She has tried to call the unemployment office numerous times, but the phone lines are always busy. She lives in a residence owned by her parents, and they gave her a break on April rent, but she plans to use the relief check to pay them by the end of the week.
[A New York City taxi driver kept working to pay bills. Now he and his family are sick.]
The Washington Post spoke with five others who had received their checks or saw them pending in their bank accounts. One was using it for rent. Two were putting it toward students loans or college fees. Another was saving it out of fear of being furloughed soon. And another planned to donate the money.
A study of what happened in 2008 found that 50 to 90 percent of the checks was spent over three months, a boost to the economy and much needed help for many families out of work.
Congress intended for most middle-class and less affluent Americans to receive a check, but there are some groups that were left out. Most high school seniors and college students are not getting any money, even if they lost a job. People who are claimed as a “dependent” on someone else’s tax return, as many college students are, do not qualify for the stimulus checks. And parents receive additional payments only for children under 17. Adult dependents, including some disabled who live with relatives, are also excluded.
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