7 Money Moves to Start the New Year Right – January ‘22

  1. If you’re still working, raise your retirement savings…

One of the most important tasks related to financial security is to save more for that time when earnings stop coming in. Choosing a tax-favored retirement account is a good choice, and you have more time than you might think to boost your 2021 contributions. You can deposit as much as $7,000 in earnings until April 15, 2022 into a traditional or Roth IRA. It’s easy to open an account with the Washington State Bank Trust Department; just give them a call at (319) 653-3921.

  1. … and go automatic.

If you have a 401(k) account available at work and you’re not currently adding to it, tell your HR department you’d like to start (or resume) having contributions deducted from each paycheck. If you are already in a plan, consider increasing your annual deduction another percentage point or two. For further savings, go through us to make an automatic monthly contribution to an IRA or another account you’ve created for a onetime need, whether it’s a new furnace or a dream vacation.

  1. Reassess your budget.

Making sure your monthly spending is less than your monthly income is another golden rule of financial security. Your needs before the pandemic versus now may be very different. Start by making a list of all your regular bills (mortgage/rent, insurance, cellphone, utilities, etc.). Then look at some of your recent credit card and bank statements to see what you’re spending on food, health care and other expenses in life that may be hard to keep track of. Finally, look for places to cut things like small items that add up, recurring charges for services you no longer need, or big changes that could have a major impact, such as moving to a less expensive location. Another great tool for tech savvy folks is a budgeting app. There are many great ones out there. These apps can pull all your information for you and help you keep track of your spending from week to week.

  1. Consolidate and simplify.

You may have accumulated a variety of retirement accounts from former employers through the years. Track down those accounts and weigh the benefits of combining them into one account- an IRA or, if you’re still working, possibly your current 401(k). That makes it easier to track required minimum distributions, and you may also save money in the process.

  1. Eliminate your paper trail

Gather all the old financial and medical documents you no longer need to refer to and shred them to protect your personal data. Be on the lookout for organizations in your area that will do this for free. Washington State Bank hosts a free Shred Day event each summer in Washington! We will advertise the event as it gets closer on our social media as well as KCII.

  1. Review your legal paperwork.

Set aside time to reread your will, power of attorney, estate plans, and other legal documents to see if they are up to date and still reflect your wishes. Are there any changes that need to be made due to family, residency, or your net worth? Check with your retirement plan administrator to be sure those accounts have the correct beneficiary designations, since they regularly determine who receives any money after your death, even if you will says otherwise.

  1. Reassess your priorities.

The pandemic has changed many people’s life goals, as well as financial goals. Create a list of goals you hope to accomplish in 2022 and organize them in four different categories: relationships, wellness, interests, and work. Your financial decisions could be come quite simple when you have a clear picture of what’s most important in your life.

This article is a summary of the following: Kimberly Lankford, AARP, December 10, 2021  https://www.aarp.org/money/budgeting-saving/info-2021/great-ways-to-organize-your-finances-now.html

Four Things to Keep in Mind While Holiday Shopping-Dec. ‘21

The holiday season is here and that means many will be busy shopping online and in-person. Below is a list of tips to help keep you safe from falling victim to a grinch this season.

  1. Shop Smart Online

The FTC recently reminded consumers who may be searching the internet for those hard-to-find gifts to be vigilant when making purchases through online marketplaces or with retailers you’ve never heard of before. Check the rules about refunds and returns, and what happens if there is an issue with the order. If someone tells you to pay with a wire transfer, gift cards, or cryptocurrency, stop and find another seller. This is how scammers ask for payment. Look for pictures of the actual item, as well as the condition and location. If you still run into issues and paid by credit or debit card, file a dispute with your card carrier.

  1. Avoid ID Theft

According to the FTC it can be easy for scammers to put up fake websites that look very similar to the real one. These scam websites may show up in your search results or come in an email that appears to be legit. Rather than clicking a link, type in the store’s URL yourself. Only share personal information that is necessary for the payment to process. None of these companies will need your bank account or Social Security number.

  1. Be wary of unexpected emails, calls, and text messages

Phishing scammers lure their targets by spoofing familiar, trusted names and logos of legitimate companies, such as Amazon. The FTC reports that from July 2020 to June 2021 Amazon impersonators increased from 16,000 to about 96,000 and nearly 6,000 consumers said they lost money. Scam emails will often encourage the recipient to call a number with queries about the purchase. If the consumer calls, the help center operator informs the caller they would need to send money before a refund could be established for an item they did not purchase. If you get an unexpected email or text message, don’t click the link. If you think it could be legit, contact the company using the phone number on their website.

  1. Make your donations count

Unfortunately, your generosity could be someone else’s greed. Fraudsters sometimes prey on donors. Do your research before donating.

If you believe you’ve been scammed or suspect a charity is acting fraudulently, contact your local law enforcement agency or the Iowa Attorney General’s Consumer Protection Division. To file a complaint, go here or call 888-777-4590.

This article is a summary from the following: https://www.iowaattorneygeneral.gov/for-consumers/consumer-focus/consumer-focus/five-things-to-keep-in-mind-while-holiday-shopping/five-things-to-keep-in-mind-while-holiday-shopping-this-year.

How to Improve Your Credit Score- Nov. '21

When it comes to personal finances, your credit score is the single most important number you should know. A strong credit score can open doors to loans and credit cards that offer better terms and rates than you would receive with a low score.

A credit score of 750 or higher is considered excellent but having a rating above 700 is still considered good. Typically, you don’t want your rating to fall below 700. There are five main factors that determine a credit score. Some have a larger impact than others, but each area is examined to determine a person’s ability to repay a loan.

  • Payment history — Consistently paying bills on time is the quickest way to increase your credit score.
  • Credit utilization —Maxing out your credit cards or consistently carrying large balances will negatively impact your credit score.
  • Length of credit history — The longer you have held an open credit account will positively impact your credit score.
  • Number of accounts or inquiries — Having too many credit inquiries can cause your score to drop. Only apply for what you need.
  • Credit mix — Having a variety of credit accounts — mortgage, auto loan, student loan, credit cards — shows you’re able to handle different types of loans and can increase your score.

Tips for Improving Your Credit Score

Building and maintaining an excellent credit score requires organization and willpower to live within your means. Following are steps you can take to get your score moving in the right direction.

  • Pay bills on time — Payment history accounts for 35% of your credit score. Set up automatic payments on your accounts to ensure you don’t miss a payment and get into a habit of paying bills on time.
  • Make multiple payments each month — Credit utilization accounts for 30% of your credit score. If your balances are too high on certain accounts, consider making multiple small payments each month to reduce the amount of credit you’re using.
  • Keep credit card balances low — Just because you have a $20,000 limit on a credit card doesn’t mean you should use it all. Try to keep your credit utilization below 30%. That will tell lenders you are a safe borrower.
  • Check your credit report each year — Visit annualcreditreport.com at least once a year to request your credit report and dispute any errors that may be pulling your score down.

With these tips in mind, you can keep your credit score in good standings, or make improvements where needed.

This article was provided by the Iowa Bankers Association.

Spotting Email Scams- Oct. '21

In recognition of National Cybersecurity Month and the ABA’s #BanksNeverAskThat campaign, this month’s blog post covers phishing emails and how to spot them.

What would you do if you received an email about a charge on your credit card for something you aren’t expecting or didn’t want? Many would immediately call the company to stop the payment or respond to the email. Scammers know that and are taking advantage by developing a new phishing scheme.

Let’s say you go ahead and give the number on the email a call. You’ll be connected to a scammer who may ask you to “verify” your credit card information, or they might say they need your password to remote into your computer. In the later case they could then install malware on your computer and block you from getting your own files.

What should you do?

  • Don’t click on any links.
  • Don’t use the number in the email. Instead, look up the company’s phone number online.
  • Never give your password to a stranger, even if they claim to be from a company you recognize. If you do give them your password, change it right away and run a scan to detect any problems. Also remember to use unique and strong passwords.
  • Don’t give your bank account, credit card, or personal information over the phone to someone that contacts you out of the blue.

If you do happen to receive a phishing email, help others by reporting it to the FTC at reportfraud.ftc.gov.

The content of this post comes from the following website: https://www.consumer.ftc.gov/blog/2021/03/spotting-scammy-emails.

5 Financial Don’t for Ever Millennial- Sept. '21

Even though many millennials worked through the Great Recession and the COVID-19 pandemic, many are taking big steps towards their financial goals. While many are actively saving others are struggling with debt. One study found that one in six millennials owes $50,000 or more, excluding mortgages. No matter which side you are on it’s good to have a financial plan moving forward. Here are five things to stop doing to keep you moving in the right direction:

  1. Don’t forget about an emergency fund & don’t give up on cash.

You never know when you might find yourself without an income or in need of cash quickly. It’s crucial to keep money in the bank set aside for an emergency. Many recommend having at least three to six months’ worth of living expenses set aside in cash for things like an unexpected car repair or other pop-up expenses.

  1. Don’t only save into your 401(k) for retirement. Do more.

Saving the maximum amount in a 401(k), or other similar retirement plan, is a great start, but try to do more. For example, open a traditional Individual Retirement Account (IRA) or a Roth IRA. These will supplement a retirement savings account and have you in better standings when it comes for you to take that next step in life. To learn more about Washington State Bank’s various retirement accounts visit our webpage, or give our Trust Department a call at (319) 653-3921.

  1. Stop putting off your will.

Many older millennials can attest to the feeling of invincibility starting to fade. Many young individuals and families put off some crucial decisions because of the uncomfortable nature of the topic. However, life is unexpected, and planning for the worst-case scenarios is especially important because only you can do it – and you must before you need it. Work with an estate planning attorney to get a will, powers of attorney and health care directives in place. This will make things easier in the future if you become unable to make decisions or pass away.

  1. Don’t try to keep up with the Jones’.

Most millennials have 24/7 exposure to their friends’ every move through social media, including their perceived wealth. The fastest way to lose your wealth (or prevent having any) is to spend it all trying to keep up with your friends. If you have spending at or above your income level through your 20s and 30s, now is the time to stop. The number 1 key to long-term financial success is spending less than you make. Saving now will leave you more flexibility in the future.

  1. Don’t procrastinate- be deliberate.

Don’t be wishing you had gotten your plan together sooner. Many have such regret that they didn’t get it together in their 30s and 40s. Learn from their mistakes and don’t be under the assumption that you have more time. Take a small, but deliberate step today toward a better financial future. For the long term, begin to set priorities and research what you need to do to achieve those goals.

It takes time to develop and implement a financial plan. Take the time now to get started or re-evaluate the strategy you have in place.

This article was taken from the following: Skylar, Patricia and Monroe, Josh. 7 Financial Don’ts for Every Millennial, Kiplinger. Aug. 08, 21. https://www.kiplinger.com/investing/wealth-management/wealth-creation/603247/7-financial-donts-for-every-millennial

Protect Yourself and Others from These Elder Fraud Scams – Aug. ‘21

In recognition of National Senior Citizens Day on August 21st, Washington State Bank is helping to create awareness on ways to help prevent financial abuse of older adults.

According to the FBI, older adults collectively lose more than $3 billion each year to elder fraud schemes. Common elder fraud schemes include:

  • Romance scams — Criminals will reach out through dating sites and social media, pretending to be interested in companionship while gaining the trust of their victim and eventually asking for money. These scams have increased by 50% since 2019, according to the Federal Trade Commission.
  • Grandparent scam — A fraudster may pretend to be a relative and ask for financial assistance due to an emergency. They may express urgency and try to sound panicked to motivate their targets to act quickly.
  • Charity scam — In these scams, the criminals will try to get older adults to contribute to a fake charity, often by cash, gift card or a wire transfer. The criminals may try to pressure their targets to give immediately.
  • Sweepstakes/lottery scams — The criminals will contact an older adult, informing them that they have won a sweepstakes or lottery and can collect their winnings for a fee.

How to Protect Elders from Fraud

Anyone can help protect themselves from financial abuse by following these tips:

  • Keep personal information private. Never share your Social Security number, account information or personal details over the phone or internet, unless you initiated contact with a trusted source.
  • Shred! Shred! Shred! Shred receipts, bank statements and unused credit card offers before throwing them away so fraudsters can’t piece together your personal information.
  • Don’t let a so-called adviser pressure you. Never let a new or untrusted adviser pressure you into sharing personal or financial details. They could be a fraudster.
  • Check your credit report. Check your credit report at least once a year to ensure no new credit cards or accounts have been opened by criminals in your name. You can access your free credit report at annualcreditreport.com.

If you believe you or someone you know may have become a victim of fraud, contact your bank for help monitoring your/their accounts for fraudulent transactions. You should also file a complaint through the FBI’s Internet Crime Complaint Center at www.ic3.gov.

 These tips were provided by the Iowa Bankers Association.

 6 Tips to Financial Freedom- July '21

Many people have a goal to reach financial freedom in their lifetime. This usually means having enough savings, investments, and cash on hand to afford the lifestyle you desire. Unfortunately, many people fail to achieve this as they are often troubled with debt, financial emergencies, and overspending. These 6 habits can help put you on the right path.

  1. Set Life Goals

Get specific. Write down how much you need to have in your bank account, what the lifestyle entails, and at what age you want to achieve it. The likelihood of you achieving these goals is higher when your goals are more specific. Then, count back to your current age and define smaller goals and dates at regular intervals leading up to the larger goal.

  1. Make a Budget

The best way to guarantee that are bills are paid for each month is t o make a monthly household budget and stick to it.

  1. Pay Off Credit Cards in Full

Credit cards with high-interest rates can be toxic to achieving your goal of financial freedom. Make a point to pay off the full balance each month. Making your payments on time will also build a good credit rating.

  1. Create Automatic Savings

Setting up an automatic withdrawal each month for an emergency fund is a great way to get started. If you set it up for the same day you receive your paycheck it can help avoid any temptation. Enroll in your employer’s retirement plan and make full use of any matching contribution benefit.

  1. Watch Your Credit Score

Your credit score determines what interest rate you qualify for when purchasing a new car or refinancing a home. It also makes a difference on things like premiums for car or life insurance. Therefore, it’s important to obtain a credit report regularly to make sure there are no black marks. Find your free credit report here

  1. Live Below Your Means

This isn’t a challenge to change to a minimalist lifestyle or to put off needed maintenance, but rather a suggestion to make small adjustments by distinguishing what you need versus what you want. Making these changes is a helpful habit to put into practice.

These 6 steps won’t solve all your money problems, but they will help you develop healthy habits that can get you on the path to financial freedom.

This article is a summary of the following website: https://www.investopedia.com/articles/personal-finance/112015/these-10-habits-will-help-you-reach-financial-freedom.asp

Should COVID-19 Change Your Retirement Strategy? - June 2021

While much of the United States is getting back to “normal” and things seem to have slowed with COVID-19, no one can say for sure how much financial damage has been done yet. Does that mean you should change your retirement strategy? Here are some things to consider when addressing your current situation.

People who were fortunate enough to continue to work were in decent shape to ride out any financial crisis. Thankfully many who lost their jobs or were temporarily furloughed in 2020 have since returned to work. If you’re currently working and saving for retirement through a 401(k) or similar plan, it’s a good idea to keep putting money towards that. If you have found yourself fortunate enough to even have more income coming in, you should also consider contributing to an IRA in 2021.

For those that lost their job because of the pandemic and have yet to go back to work, your goal should be to preserve your retirement savings as best as you can. If you have an emergency plan and haven’t already exhausted it, you may want to tap into it first when needed. While the CARES Act loosened the rules on 401(k) loans and early retirement plan withdrawals in 2020, that has come to an end. Those income funds should never be your first resource when you need cash.

If the financial crisis did cut into your retirement savings or made it hard for you to continue to contribute to the funds, think about retiring a little later than you may have originally planned. Working longer will allow you to save more and delaying Social Security will mean bigger monthly benefits when you do collect them. If you’re out of work and must tap into your savings, it’s best to start with nonretirement accounts.

Build (or Rebuild) An Emergency Fund

If you didn’t have an emergency fund prior to the pandemic, you probably wish you would have. If you did have one, you may need to replenish it now. Some suggest saving at least three months of living expenses in a liquid account, while others recommend saving six or more months’ worth. Achieving this can be very difficult when you’re living paycheck to paycheck, but it’s a goal worth building towards at any age. If you’re about to enter retirement, or are already there, you may want a much larger emergency fund. Keeping two or three years’ worth of expenses in a money-market account could help you weather another financial crisis while leaving the rest of your retirement portfolio intact.

This post is a summary of the following article: Daugherty, Greg. “Should COVID-19 Change Your Retirement Strategy?” Investopedia, Investopedia, 29 Apr. 2021, www.investopedia.com/should-covid-19-change-your-retirement-strategy-5069395.

3 Questions to Consider Before Buying Your First Home- May '21 Entry

First and foremost, it’s important to determine your long-term goals and how ownership fits with these goals. Whether you see it as a sense of independence, or just a good investment, these are important things to think about beforehand. Narrowing down your big-picture goals will help steer you in the right direction.

  1. How’s your financial health?

This is a big one! Before falling in love with your dream home, you should give your finances a serious check-up.  Look at your savings. It’s recommended that you have three to six months of living expenses in a savings account before purchasing your first house. Remember to consider things like the down payment and closing costs, too. Review your spending. See how much you’re spending each month and where your money is going. This will help you determine how much you can put aside for a mortgage payment. Don’t forget to include things like utilities, food, maintenance expenses, vehicles, etc. Check your credit. In most cases you will need a good credit score, a history of paying your bills on time, and a maximum debt-to-income (DTI) ratio of 43%.

  1. How much mortgage do you qualify for?

Before you start shopping, it’s important to talk to a lender to see how much the bank will give you to make that big purchase. Make sure to get preapproved for a loan before placing an offer on a home. You can get this process started on our website by filling out our Mortgage Information Form!

  1. How much home can you actually afford?

Number 2 and 3 go hand-in-hand. You may be preapproved for a $200,000 home, but that doesn’t mean you have to borrow that much. Many first-time homebuyers make this mistake and end up “house-poor” with little left after their monthly mortgage payment is due. When deciding how big of a loan to take, look at the house’s total cost, not just the monthly payment. Consider things like property taxes and homeowners’ insurance as well.

Remember that the more you educate yourself about the process beforehand, the less stressful it will be, and the more likely you will be to get the house you want for a price you can afford. When it's done, you'll have the confidence that comes from successfully negotiating a major step in your life.

This article is a summary from the follow website:

Fontinelle, A. (2021, March 21). First-time homebuyer's guide. Retrieved April 22, 2021, from https://www.investopedia.com/updates/first-time-home-buyer/

The Importance of Keeping Your IRA Beneficiaries Up-To-Date- April '21 Entry

If you have a retirement account, it’s important to keep your designated beneficiary up-to-date. Often people find that their designated person or establishment is not who or what they think it should be.

If you are divorced and remarried, your ex-spouse may still be on the form. If you named a charity as your beneficiary years ago, the charity may no longer exist. Or what if your single beneficiary predeceased you? Here are some things to keep in mind when determining your new beneficiary, and how to get the changes made.

Retirement account beneficiary designations trump Will and Trust directives, so they need to be periodically checked and updated. Beneficiary designations should be reviewed right after any major life events such as remarriage or divorce, the death of a spouse, or the adoption or birth of a child. These things often get overlooked. Most people’s first thought after having their second child isn’t to add them to the beneficiary list. The same can be said after the death of a spouse. Many do not realize that IRAs are not governed by provisions in your Will or a Trust (unless you name the trust the beneficiary). It’s important that both the Will and the IRA documentation align to avoid any legal battles.

Fortunately changing your beneficiary isn’t terribly difficult. Changes can be made by submitting a change-of-beneficiary form to the designated establishment in which it is held. Additional beneficiaries can be added the same way.

If you have an IRA with the WSB Trust Department and would like to check to see whom you have designated as a beneficiary, give us a call at (319) 653-3921.

This article is a summary from the following website:

Staff, Investopedia. “Who's Inheriting Your IRA? Why Beneficiaries Should Be Up-to-Date.” Investopedia, Investopedia, 31 Dec. 2020, www.investopedia.com/retirement/importance-updating-retirement-account-beneficiaries/.

Spotting COVID-19 Vaccine Scams - March '21 Entry

Since the COVID-19 pandemic began, people all over the world have been anxiously awaiting the development of a vaccine that could protect them from the coronavirus. While the announcement that the vaccine is being distributed throughout the U.S. is great news, cybercriminals are certain to seize on the news in future fraud scams.

COVID-19 vaccine scams could come through phishing emails that offer to sell a vaccine or other type of treatment. The legitimate coronavirus vaccines, however, will be distributed in phases; be skeptical of any vaccine or treatment offer you receive by email. Follow these tips to avoid becoming a victim.

  • Be suspicious. Like with all emails, it’s important not to immediately believe anything that sounds too good to be true. If you are unsure of whether the offer is legitimate, search for it online, checking credible sources.
  • Read the email carefully. There are several tell-tale signs that an email is a phishing scam. It could contain several misspelled words or grammatical errors. The name on the email may not match the email address. If you hover over the links, the URL may not point to a credible website. Check the email carefully and do not click any link or download any attachment until you are 100% sure it is legit.
  • Don’t panic. Cybercriminals may use scare tactics to get you to click on a link before you’ve had a chance to investigate it. For example, if you receive an email that informs you there may not be enough vaccines for everyone, ignore it.
  • Go straight to the source. If you receive an email that appears to come from the federal government, and you are unsure if it is real, do not click on a link in the email. Navigate to their website through your web browser and contact the organization directly to confirm its legitimacy.

When in Doubt, Throw It Out

A vaccine is long-awaited good news that will eventually get the country back to normal operations. It is critically important, however, that consumers exercise caution with any communication offering a vaccine. Just like with food that has been in the refrigerator too long, the best rule of thumb is: When in doubt, throw it out.

These tips are provided by the Iowa Bankers Association.

3 Steps to Be Set Up for Financial Success in 2021- Feb. '21 Entry

The past year brought on so many new challenges for everyone as well as the disruption of “normal life” as we knew it. Many are ready to say goodbye to the past and make 2021 a year for success. Planning and staying proactive can be used to your advantage when it comes to taking control of your finances this year. To get us started, here are three simple steps to help you set a solid foundation for your financial planning.

  1. Find the Balance

More specifically, find the balance between saving responsibly for tomorrow and enjoying yourself today. Start by looking at what you need to save. This can be done by setting up a savings rate to help you build financial security and achieve your long-term goals, such as financial independence or retirement. Traditionally, experts recommend saving between 10-20 percent of your income for long-term financial goals. That might work great for you, or you may want to take a more aggressive approach and save somewhere in the 25-40 percent range, depending on your goals. While setting a higher rate may sound great, it’s important to not feel as if you are sacrificing so much enjoyment in order to save for “someday”.

  1. Set Intentions and Priorities

Making financial decisions can be very difficult for most of us as we simply cannot afford to do everything all at once. Therefore, we must prioritize what we can say “yes” to now, and what we must hold off on. It’s recommended that individuals prioritize what is most important to them on how they want to live and the experiences that matter most. From this, you can define priorities and be intentional about how you want to use your time and money.  

  1. Focus on What You Can Control

2020 showed us there is a lot of things we do not have control over. This realization can be overwhelming and make you question your financial goals. It’s important to focus on what you can control. Figure out what you can influence. We often can’t prevent bad things from happening, but we can plan for them in a sense. By setting up a secure financial future you will be prepared for when things don’t go according to plan.

Taking these three steps will help you to make 2021 a good year for your finances and your goals.

This article is a summary of the following article:

Forbes: Roberge, E. (2021, January 21). 3 Steps to Set Up for Financial Success In 2021. Retrieved January 26, 2021, from https://www.forbes.com/sites/ericroberge/2021/01/22/3-steps-to-set-up-for-financial-success-in-2021/?ss=personalfinance&sh=222f7d4d21f1

What You Need to Know About the Second Stimulus Payment- Jan. '21 Entry

Last week legislation passed the largest stimulus package since the CARES Act was signed in March of 2020. As expected, this new bill may cause some confusion so to help sort it out, here are a few questions and answers about the new package.

When will I get my check? Checks are supposed to be produced quickly and some will be receiving their payment as early as January 6th. Just as the last, the checks are advances of credits for 2020. It will not affect your “normal” refund in 2020, nor how much you owe.

How will I get my check? In many cases, direct deposit. The IRS will deposit your payment directly into the same banking account you used for your last filed return. Others will be mailed out as before.

How big will my check be? Each payment will be $600 per person- or $1,200 for married couples filing jointly – and an additional $600 per child.

Are their limits on children? There are no limits on the number of children that qualify, however the child must be under the age of 17 at the end of the tax year.

Are there income limits on checks? The amount of the check will begin to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household). This is the adjusted gross income, not taxable income. The term “phaseout” means that the benefit will decrease as a person’s income goes up. It’s a 5% drop which means that for every $100 of income above those thresholds, your check will drop by $5. This phaseout also applies to the dependent portion of a payment as well.

What if I make less in 2020 than in 2019? Your check is determined by your 2020 income but will be based on your 2019 tax returns. If you are entitled to more money, you can claim a credit on your 2020 federal income tax return for the difference (just as before). Those that receive government benefits or do not have any income can still expect to receive a check.

What if I didn’t file a 2019 tax return? Non-filers who receive benefits from Social Security Administration, Railroad Retirement Board, and the Department of Veterans Affairs will receive automatic payments based on information already in the system.

Is my check taxable? No. As before this is not taxable income.

Do I need a Social Security Number (SSN) to get a check? Yes, or an adoption taxpayer identification number. The same applies to spouses and kids. If you are married to someone with an ITIN and you file jointly, this will not disqualify you from getting a check. Additionally, if you are a married taxpayer filing jointly and at least one of you has a valid SSN, you will receive a check for your dependent. This is different from the CARES Act.

The following article is a summary of:

Erb, Kelly Phillips. “All You Need To Know About Round Two Of Covid-Related Stimulus Checks.” Forbes, Forbes Magazine, 21 Dec. 2020, www.forbes.com/sites/kellyphillipserb/2020/12/21/all-you-need-to-know-about-round-two-of-covid-related-stimulus-checks/?ss=personalfinance.