Stimulus Check Smackdown: HEALS Act vs. HEROES Act

Amount of Payment

Let's go directly to the most important factor for most Americans: Which plan will pay you the most money?

If you don't have children or other dependents (such as elderly parents living with you), the HEALS Act and HEROES Act stimulus check plans are even. They both offer $1,200 base payments for single people, or $2,400 for married couples filing a joint return. In addition, both plans phase-out payments for higher-income people on essentially the same schedule (there is a slight difference for people who receive foreign earned income or income from a U.S. territory). If you're single, married but filing a separate tax return, or a qualifying widow(er), the phase-out kicks in if your adjusted gross income (AGI) is above $75,000. If you're a head-of-household filer, the AGI threshold is $112,500. If you're married filing a joint tax return, it's $150,000.

However, for people with dependents, the HEROES Act has a big advantage in most cases. That's because the extra payment for each dependent under the HEROES Act is a whopping $1,200. Compare that to the modest $500-per-dependent payment offered under the HEALS Act, and you can see why the HEROES Act comes out on top for the majority of families. (The CARES Act paid $500 for each child age 16 or younger.)

The HEALS Act is better than the HEROES Act for one group, though. Really big families – we're talking families with eight or more children/dependents – would get more money under the HEALS Act. This is because the HEROES Act limits the amount of extra payments for dependents to $3,600 (i.e., for three dependents), while the HEALS Act doesn't include a limit. So, for example, if you have eight kids, you can get an extra $4,000. If you have nine kids, that's an additional $4,500 in your pocket. With 10 kids…well, you get the point. With the HEROES Act, no matter how many children you have, you'll never get more than $3,600 in additional payments.

Eligibility for Payment

Who will actually get a second stimulus check? That's another important question. Once again, the HEROES Act offers more than the HEALS Act in terms of spreading the wealth.

Both plans would deny payments to:

• Nonresident aliens (i.e., someone who isn't U.S. citizen, doesn't have a green card, and isn't physically present in the U.S. for the required amount of time);
• Anyone who can be claimed as a dependent on someone else's return (although the person claiming them as a dependent would get an additional payment); and
• Estates and trust.

The HEALS Act proposal would add people in prison or jail, people who died before 2020, and people who don't have a Social Security number to the list. Generally, no stimulus checks for them.

The HEROES Act, on the other hand, says nothing about incarcerated or dead people. So, unless the IRS asks that payments to prisoners be returned (as they did with CARES Act payments), then it may be safe to assume that they would qualify for stimulus checks under the HEROES Act. Likewise, for payments to deceased people, it seems as if they might not have to be return if they're accidently sent out (the IRS also asked for these payments to be return after the CARES Act).

People without a Social Security number would still get a stimulus check under the HEROES Act if they have a Taxpayer Identification Number (TIN). By allowing TINs instead of a Social Security number, the HEROES Act would allow certain people who are not U.S. citizens and who can't get a Social Security Number to receive a stimulus payment.

Method of Payment

When it comes to the authorized methods of sending out stimulus check payments, the HEALS Act has the upper hand. Both the HEALS Act and the HEROES Act allow the IRS to send out paper checks or electronically deposit payments directly into a bank account that you provided after 2017 for purposes of receiving a tax refund. So, for example, if you filed your 2019 tax return earlier this year and asked the IRS to directly deposit your refund into your bank account, the IRS can drop your stimulus check into that same account.

The HEROES Act doesn't authorize any other methods of payment. So, if you didn't get a refund on your 2018 or 2019 tax return, or you didn't ask for direct deposit if you did get one, then you would get a paper check in the mail for your second stimulus payment.

On the other hand, the HEALS Act allows two additional methods of payment. First, it authorizes the IRS to electronically deposit your second-round stimulus payment into a bank account that you used after 2017 to make tax payments. So, for example, if you owed tax last year and paid the amount electronically from your bank account when you filed your tax return, the IRS could directly deposit your second stimulus check into that account. The same rules would apply if you made electronic estimated tax payments from your account.

The HEALS Act would also permit payment to a Direct Express debit card account, a U.S. Debit Card account, or other Treasury-sponsored account. (The IRS did eventually mail out debit cards for first-round payments.)

Reduction or Offset of Payment

Being eligible for a second stimulus check is one thing. Getting the full amount is another. Both the HEALS Act and the HEROES Act would prevent the reduction or offset of stimulus payments to pay back taxes or other debts owed to the federal or a state government. Payments would not be subject to garnishment by creditors or debt collectors, either. They also would not be lost in bankruptcy proceedings.

However, when it comes to the IRS holding back stimulus check money to pay child support arrears, the two plans go in different directions. Under the HEALS Act, if you owe child support, the IRS would be allowed to take some or all your second-round stimulus check to pay arrears (as it could with first-round checks). That wouldn't be permitted under the HEROES Act.

How you feel about the two plans on this point probably depends on which side of the fence you're on. If you owe child support, the HEROES Act helps you. However, if you're receiving the child support, you're better off with the HEALS Act.

Modification of the CARES Act

What about changes to the first round of stimulus checks? The HEALS Act and the HEROES Act both reach back to the CARES Act and make changes to the earlier law. The HEALS Act has a light touch on the CARES Act, while the HEROES Act places a heavy hand on it.

Under the HEALS Act, prisoners and dead people are retroactively made ineligible for first-round payments. First-round payments also would not be subject to garnishment going forward (although previous garnishments wouldn't be undone).

The HEREOS Act goes further and, in some cases, would actually increase the amount of your first-round payment (the IRS would have to send you the extra amount). Retroactive changes to the CARES Act included in the HEROES Act would:

• Allow the extra $500 payment for each dependent, rather than only for children below age 17;
• Allow a first-round payment without a Social Security number for people with a TIN;
• Prevent the reduction or offset of first-round payments for past-due child support; and
• Prevent garnishment of first-round payments.