Many Iowans are finding an extra $600 deposited in their checking accounts this week, courtesy of Uncle Sam.
The latest round of federal stimulus checks are arriving, with married couples who meet income guidelines getting $1,200, and 600 more dollars for each child. Urbandale CPA Jeff Strawhacker says you do not need to worry about holding back any portion of the checks for taxes.
“The rules on this round of stimulus checks, as they were on the first round, the checks are not considered taxable income for either federal or Iowa purposes,” Strawhacker says, “so it is tax-free money.”
While some of us may head straight for the electronics store to buy a new flat-screen TV, others will be using the stimulus checks to pay the rent and utility bills. “I think the government would love it if people could pump it into the economy, but we all know the reality is that a lot of people need this just to pay basic living expenses,” Strawhacker says. “Those that it’s a bonus to, it would be great to use to pay down some debt or just to put into savings for a rainy day.”
The federal stimulus checks issued last spring were for up to $1,200. There was a lengthy debate in Congress in recent weeks over the amount of this latest round of checks. Some, including President Trump, argued they should be for $2,000 for individuals who make less than $75,000 a year. Lawmakers and the White House settled on half the March direct payments — at $600.
“For the income parameters they set, the money is going to help in some regards,” Strawhacker says. “I think there are a number of people who could have benefited from a higher check, simply because they’ve been unemployed or underemployed for a long time and this would go a long way to easing some of their financial distress.”
This latest round of stimulus checks is expected to cost the federal government $166 billion. The Coronavirus Aid, Relief, and Economic Security — or CARES — Act that passed last March was worth $2.2 trillion.