The past few years have witnessed growing economic uncertainty across the world. To protect and support its citizens during times of crisis, our federal government has implemented a policy of distributing stimulus checks to eligible individuals. The money helps encourage spending and boost the economy during recessions and periods of a financial crisis. If you are new to this concept, dive into the world of stimulus checks to understand how this works.

What is a stimulus check?
Stimulus checks are direct payments made by our country’s federal government to eligible groups of citizens, particularly during times of economic distress. These checks can be received in three forms: a paper check, a direct deposit, or tax credits to lower tax bills. Its ultimate goal is to encourage spending by taxpayers, which boosts their confidence in the economy and drives revenue for retailers and manufacturers.

Who qualifies for a stimulus check?
You need to meet specific criteria to receive a stimulus check. For instance, you must be a citizen or resident of the country. Also, one cannot claim to be a dependent to receive the money on another person’s tax return. Further, a person’s income threshold is considered based on their tax filing status. These limitations have been implemented to ensure the money reaches those who need it the most. For example, if a single person’s Adjusted Gross Income (AGI) is too high based on their tax filing status, they do not qualify. Interestingly, the amount received also varies according to a taxpayer’s filing status. For instance, joint taxpayers generally get double that of single taxpayers. For many people with unpaid back taxes, stimulus payments are automatically applied to their outstanding balance.

Are stimulus checks better than tax credits for increasing consumer spending?
Research by the National Bureau of Economic Research (NBER) found that the method of delivering fiscal stimulus impacts spending practices. While stimulus checks or deposits have led to a notable increase in spending, applying tax credits has not resulted in an equivalent increase in spending or consumer activity.

How did stimulus checks help during the financial crisis of 2008?
These checks have been issued several times to boost the country’s economy. Most notably, they were used after the economic recession of 2008 as the administration felt that it would prevent unemployment rates from going beyond eight percent. The payments awarded during that time were governed by the Economic Stimulus Act of 2008. Payments were made to people with a minimum of $3,000 in qualifying income from, or in combination with, Veterans Affairs benefits, Social security benefits, Railroad Retirement benefits, and earned income. Eligible individuals received checks between $300 and $600, while married taxpayers filing jointly received between $600 and $1,200. Couples with eligible children received a bonus of $300 for every qualifying child.

How to view the status of your stimulus check?
To check the status of the economic impact payments issued to you by the government, access your IRS account by heading to the page labeled “Your Online Account” on the agency’s website. Ensure you have your Social Security Number in hand for identification purposes before beginning the process. You can also use this service to make payments, access your tax history, or make payment arrangements.

Are stimulus payments issued by the federal government only?
Not all stimulus payments are issued by the federal government. During times of crisis, many state governments around the country step in to help their fellow citizens. However, these payments are not as large as the federally issued stimulus checks. The state of California, for instance, offered a “Middle Class Tax Refund” to eligible citizens, whereas the state of Indiana offered “Automatic Taxpayer Refunds.” Many other states, such as Massachusetts, Illinois, and New Jersey, provided tax rebates based on income or property taxes. In the past, some other states have introduced alternative forms of tax exemptions, such as gas tax holidays and temporarily-suspended grocery taxes, to help their citizens in times of need.

When filing your taxes, ensure you go through federal and state laws to find rebates you qualify for. These rebates can quickly add up depending on your location and help you save significantly, so make the most of it. You can find detailed information regarding the same on the IRS portal or in individual state tax guides. Despite the widespread criticism of stimulus checks from various sources, they have been an integral factor in ensuring the smooth functioning of the economy by providing people with purchasing power during their times of need.