Ask Kim
How Will I Get My Stimulus Money?
Here's what you need to know about collecting your share of the $787 billion package that aims to revive the economy.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
February 19, 2009
Since Congress passed the economic-stimulus bill February 13, a lot of people have asked us how they will get their money. Some of the details will be worked out in the coming weeks, but here's what we know so far.
How much will the "Making Work Pay" tax credit be?
The stimulus provides a refundable tax credit of 6.2% of taxable wages in 2009 and 2010, to a maximum each year of $400 for single taxpayers and $800 for married couples filing jointly. The credit begins to phase out for single filers with adjusted gross incomes of $75,000 or higher, or $150,000 for married couples filing jointly, and it disappears entirely for single filers with AGIs of $95,000 or more, or $190,000 for joint filers.
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How will I receive the credit?
You'll get the money through a reduction in income tax withheld from your paycheck, adding about $30 to $40 a month to most people's take-home pay. After the IRS adjusts its withholding tables, employers will change their automatic withholding systems; you shouldn't have do anything to get the extra money. The IRS says that most people should see the change in their paychecks this spring.
I am self-employed and don't have my taxes withheld. What should I do?
In that case, you could reduce your quarterly estimated taxes because of this credit, says Mark Luscombe, principal analyst with the tax and accounting group CCH. Then you will claim the credit when you file next spring, bringing your tax bill down into line with your reduced payments.
What about people who have a job now and have their withholding reduced, but then lose their job in the next few months?
"They will have reduced withholding for the period they work, then the amounts will be reconciled when they file their returns for the year," says Scott Weiner, senior tax analyst with the tax and accounting business unit of Thomson Reuters.
What will the stimulus payment be for retirees?
The stimulus provides a one-time payment of $250 to recipients of Social Security, Railroad Retirement and Veteran's Administration benefits, and to government employees who don't receive Social Security. They'll receive the money even if they have little or no income, says Luscombe. This payment will reduce the "Making Work Pay" credit if they are eligible for both.
How will retirees get their money?
People who get their Social Security or other benefits electronically will get this payment electronically as well, says Weiner. Others will get a check.
When will retirees receive the money?
"The statute says that payments must begin at the earliest practicable date, but no later than 120 days after the date of enactment," says Weiner. So retirees should get the payments before June 17 because President Obama signed the bill on February 17.
Reader Comments (18)
Posted by: Pam V. at 02/20/2009 08:22:52 AM
Is that all? I would think we'd get enough to actually enjoy if our children will be paying for it for the rest of their lives.
Posted by: DougTheBug at 02/20/2009 02:09:48 PM
This will make little difference to consumers. The perception and realization of that will cause even more economic damage. But somehow this is supposed to work better than if they just split up the stimulus averaging over $4000 per adult? THAT would've made a huge difference.
Posted by: JWargin at 02/20/2009 05:28:56 PM
I agree with the other posts. 30-40 extra a month? Oh boy, I can get that new flat screen TV I have wanted now. Hundreds of billions of dollars and that's all we get? How will this stimulate the economy, create jobs? Another smooth talker has pulled the wool over people's eyes. Vote for his bill or the country is headed towards catastrophe...now that's good leadership. When all is said and done, the government would have spent trillions of our dollars and college is still too expensive, the pothole in the road will still be there, and dumb people will still do dumb things with their money.
Posted by: TopBanana at 02/20/2009 05:50:41 PM
There is not enough to stimulate anything economically. The stimulus that the fat cats get will not trickle down to the working cats. The economy needs a trickle up stimulus.
Posted by: Dr MP5 at 02/20/2009 07:03:12 PM
You are surprised? I am shocked that there are people out there that actually believed all of that campaign rhetoric (i.e.; "Change we can believe in"). In reality, it is just "more of the same old, same old" - and, unfortunately, they are mortgaging our (grand)children in order to do it. Just like there is NO way that Congress can effectively run Corporate America, there is NO way "Obamanomics" can possibly work. Oh well, like the old saying goes, "No one ever went broke underestimating the intelligence of the American public."
Posted by: Davy G at 02/20/2009 07:25:44 PM
Take your stimulus money and invest it in a conservative mutual fund in the name of your children or grandchildren, or else put it toward their college tuition. You're borrowing it from them.
Posted by: Mike at 02/21/2009 11:15:17 AM
The "change we can believe in" is the little bit of extra change that will appear on our next paycheck at the expense of the next two generations. Elections have consequences !
Posted by: Prizoner2112 at 02/22/2009 12:43:09 PM
For all the complaints, here is another way to look at this. Ask yourself how much was your last annual pay increase. Was it between two and five percent? Now imagine that they are going to not take out 6.2% of your paycheck. It would feel like a pretty good raise even though it is your money after all. With the cap of $800 (married) and $600 (single). That is enough to pay for your car insurance for a year or if you manage your banking accounts correctly, it can make for some extra holiday money. This DOES actually pay the bulk to the working people.
Posted by: Ken at 02/22/2009 06:12:19 PM
>POSTED BY: Dr MP5 "there is NO way 'Obamanomics' can possibly work." That’s what Repubs said last time Democrats won the White House and Congress, and they gave us lower unemployment, a balanced budget, and 8 years of unprecedented prosperity. The stock market gained 227% during President Clinton’s administration. How’s your 401K doing DocMP5?
Posted by: The Man at 02/22/2009 11:14:14 PM
Stop crying unless you have a solution. Obama is doing what he can. And don't forget that he has to clean up the mess of last eight years first!
Posted by: Mike at 02/23/2009 10:04:57 AM
The election is over. We went through the democratic process. It's about time we said "Let's see what we can do to make this thing work". If all we do is complain, believe me things will get much worse.
Posted by: Blessed at 02/24/2009 05:17:11 PM
Mike, it's true the next generations may pay some of the consequences, but wouldn't you want your ancestors to live better now and pray the future will take care of itself? None of us know what the future holds, so why not look for the positive instead of the negative and try to take it one day at a time.
Posted by: Donna at 02/24/2009 08:29:52 PM
Who do you think you are Mike?
Posted by: Rod at 02/25/2009 11:12:56 AM
For those who keep pretending that Clinton is a hero and our economy was better with him in office, keep in mind that HE is the one who signed the free trade agreements that sent our jobs overseas. Keep in mind that Clinton also pushed the sub-prime mortgages so poor people could own homes. Yes, he balanced the budget, and as a result, we were ill-prepared to defend ourselves militarily when we were attacked on 9/11. Do some homework. No president has ever been perfect, and none of them will ever be. We need to learn to stop pointing fingers, stop saying "The Democrats" and "The Republicans" and learn to be "Americans" again - then, and only then, will this mess fix itself.
Posted by: george at 02/27/2009 11:38:55 AM
...right on mike, we need to get rid of the congress we have and get an "american" congress.
Posted by: Dr MP5 at 02/27/2009 03:43:13 PM
Rod; THANK YOU for your 25 Feb posting - I was afraid I was going to have to sign back on... to provide some remedial education in US Political History and Macroecomics 101. You are correct that our current economic crisis SHOULD BE a non-partisan issue. In fact, many of us believe that ANY gov't intervention, regulation and/or bailout can only make matters FAR worse in the longer haul. It is difficult for me to understand how anyone believes that a $787B "Stimulus" Package could possibly reverse the loss in market valuation since Oct'07 (which, as of this morning, is in excess of $15 Trillion!). Moreover, the government's "bailout" of failing private sector businesses does nothing more than REWARD those key executives for their mismanagement and for the excesses they enjoyed during 16 years of their abuse of the Credit Derivatives market and Credit Default Swaps. We are watching the House of Cards beginning to crumble - and believe me - we haven't seen the bottom yet. As I said B4, the worst part of the equation is that "they are mortgaging our (grand)children in order to do it." And I don't think people realize that they are funding this spending by selling T-Bonds to Europe, Japan & CHINA!!! I, for one, am glad that I will be six-feet under when China "calls in the markers." Some of you have asked for alternative solutions - Let me suggest that we fall back on the principle that made this country great to begin with - Free Market Capitalism. Yes, there WILL be fallout and the "pain" may be excrutiating at times - but I am having some difficulty finding exactly where in our Constitution it states that the Feds are responsible for bailing-out failed businesses or interfering with the private sector. Obviously they "know" something we don't - because they continue to vote themselves merit & COLA salary increases, oenerous per diem allocations, etc. That being said, I think we all can agree that we are fortunate that we are citizens of the US of A - where we can freely express our opinions without fear of reprisal (or in China's case; summary executions). God Bless America, our Constitution and our Bill of Rights. And best of luck to all of us freedom-loving Americans. I, for one, need to get back to makin' money!!!
Posted by: Dave Farrar at 04/02/2009 09:08:28 PM
The reason that all our jobs went overseas, people, is because the government paied them to go over seas. Its simple,If americans arent working then they are not paying taxes,guess what then the government has no money to spend without borrowing it from overseas. We need to build it here in the USA. Ad tax any company making products overseas and then shipping back over here.
Posted by: Maude at 05/16/2009 07:04:44 PM
why doesn't the government use some of their stimulus money to help get quality manufacturing jobs back in the U.S., then we could all pay taxes and wouldn't need it. We need full time jobs with benefits back.