Stimulus checks: Who gets money in Dayton region, and spending advice

One-time federal stimulus checks are expected to go out to more than 90% of tax filers in the Dayton region to help with the economic hardship caused by the coronavirus, according to a Dayton Daily News analysis.

IRS tax data suggests that more than 670,000 tax filers could qualify for the payments in Butler, Champaign, Clark, Greene, Miami, Montgomery and Warren counties, this newspaper found.

For many, the money is expected to be an immediate lifeline to help cover rent and mortgage payments, utilities, groceries and other critical bills. Economists and local leaders say recipients are strongly encouraged to plan out how to best use the money since this could be a long-lasting crisis.

“It’s a mistake to call it a stimulus — it’s a rescue,” said Evan Osborne, professor of economics with the Raj Soin College of Business at Wright State University.

The pandemic could last months, especially since state leaders predict coronavirus cases won’t peak until mid-May, when there could be as many as 10,000 new cases per day.

CORONAVIRUS: Complete coverage from the Dayton Daily News

Money’s coming soon

The IRS soon will start sending stimulus payments to millions of Ohio taxpayers via direct deposit or paychecks in the mail.

The checks are part of the $2.2 trillion rescue package that is aimed at helping an economy that has been ravaged by the slowdown caused by the coronavirus.

Individuals earning less than $75,000, heads of households earning less than $112,500 and married or joint filers who earn less than $150,000 will be eligible for the full $1,200 rebate, as well as $500 per child, according to the IRS. A standard family of four can be eligible for a rebate up to $3,400.

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In tax year 2018, about 409,790 individual tax filers in the seven-county Miami Valley region earned less than $75,000 and 211,492 joint filers earned less than $150,000, meaning they would qualify for the full rebate, according to data from the Ohio Department of Taxation.

Reduced rebate payments, based on a sliding scale or “phase-out threshold,” will be made to individuals who earn up to $99,000, heads of households with one child who earn up to $146,500 and joint filers with no children who earn up to $198,000.

The rebate is reduced by $5 for every $100 the taxpayers earn above the full rebate limits.

In tax year 2017, about 332,890 individual filers made less than $100,000 in the seven-county area, while about 246,260 joint filers earned less than $200,000, according to the most recent IRS data.

About 93,130 head of household filers in the region earned less than $100,000, but more detailed data was not immediately available to get a better estimate of how many might qualify for stimulus money.

Nationwide, about 125 million Americans could get a rebate (83% of tax filers), including around 5.35 million filers in Ohio, which has fewer high-income earners than the average U.S. state, said Kyle Pomerleau, resident fellow with the American Enterprise Institute who analyzed 2017 tax data.

ExploreThe IRS and Treasury Department say stimulus checks are expected to start arriving within three weeks.

Will stimulus payments work?

Stimulus payments in 2008 helped boost consumer spending and helped maintain consumer demand at a time when the economy was entering into a deep recession, according to research by Jonathan Parker, who is now a finance professor at the MIT Sloan School of Management.

Households on average spent half the amount of each stimulus check within the same quarter it was received, the research found.

Nearly half of stimulus recipients (49%) used the money to pay off debt, while about 30% spent the money and 18% saved it, according to the U.S. Bureau of Labor Statistics.

But the latest stimulus payments will do little for the economy in the short term because unlike typical recessions, the main responsibility of the government today is winning the medical war against the virus instead of economic policy, said Parker.

The stimulus funds would be better though of as disaster insurance because people should be staying home and the economy shouldn’t be stimulated, though the hardest hit people need to be able to pay bills and eat, he said.

People are out of work and not producing goods or earning income, and also they are avoiding the types of consumption that would put them in crowded places, which means there will be a huge collapse in GDP and national income, Parker said.

“So I don’t expect a big increase in spending, but I do expect people to be able to pay their rent and other bills as well as not have to cut consumption as much as they would have without these payments,” Parker said.

The provisions in the bill that provides direct rebate payments are not intended to stimulate the economy, and instead are meant to provide relief and prevent further economic fallout, said Hee-Young Shin, associate professor with the Department of Economics at the Raj Soin College of Business at Wright State University.

“(This) new package is not intended to give economic stimulus to the U.S. economy,” he said. “Instead, it is geared toward providing a minimum source of income to the majority of Americans to sustain their basic material lives.”

The bill seeks to prevent the U.S. economy from falling into a severe recession, because without action like emergency payments, the economy would contract severely, below even the level seen during the Great Depression, he said.

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Hopefully, the rebates will be distributed quickly and will be extremely helpful for lower-income families, but it's important to keep the $250 billion in direct payments in perspective, because they represent little more than 1% of the U.S. GDP, said Richard Stock, director of the Business Research Group (BRG) at the University of Dayton.

“It’s definitely not going to somehow resolve many of our issues,” he said. “It winds up being a drop in the bucket and additional things need to happen as quickly as possible.”

Spend, save, donate

One issue with the rebate payments is that many people who desperately need the money do not have bank accounts — and do not have direct-deposit set up with the IRS for refund purposes — meaning their checks likely will need to be mailed out and will take longer to get into their hands and pocketbooks, Stock said.

Many local businesses that are in the worst financial trouble are closed, which means the stimulus checks aren’t going to be very helpful to help their sales since consumers have no way to spend money to support them, Stock said.

Rebate recipients who are financially stable and are thinking about saving the payments might want to consider donating to a food bank or other local charities that are in high demand during this crisis, Stock said.

Stimulus payments should help many Dayton residents who are living on the edge, but citizens should prioritize paying their rent and mortgages with the money, because while evictions have been temporarily halted, obligations eventually will come due, said Dayton Mayor Nan Whaley.

“We don’t know how long this is going to last, so definitely having food and housing covered for a while is smart,” Whaley said.

Rebate payments will provide relief to people who through no fault of their own really need it, but true stimulus will have to wait until the crisis is over and the economy is no longer shutdown mode, said Osborne, economics professor at Wright State University.

“This doesn’t replace what they lost, in terms of income, but it will help people feed their family, pay the rent,” Osborne said.

“Spend it as you think best,” he said. “Once we are past this epidemic, then we can starting thinking about how to revive the economy. We’re just going to have to tough it out.”

Snapshot of eligible “full payment” stimulus recipients in Butler, Champaign, Clark, Greene, Miami, Montgomery and Warren counties

409,781: Number of individual tax filers who earn less than $75k in Miami Valley region

211,492: Number of joint tax filers in region who earn less than $150k

93,130: Number of head of household filers in the region who earn less than $100k*

SOURCE: Ohio Department of Taxation and the IRS

*Data for individual and joint filers is for tax year 2018 (payable in 2019). Data for head of household filers is for tax year 2017.

*Individual filers who earn up to $99k, joint filers with no children who earn up to $198k and heads of household with one child who earn up to $146,500 can be eligible for reduced payments

Who is eligible for stimulus payments?

Tax filers with adjusted gross income up to $75,000 for individuals, up to $112,500 for heads of households and up to $150,000 for married couples filing joint returns will receive the full payment.

Filers with incomes above those amounts will receive reduced payments, with the cap being up to $99,000 for individuals and $198,000 for joint filers with no children .

Payments are reduced by $5 for each $100 above the $75,000/$150,000 thresholds.

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.

How will the IRS know where to send my payment?

Economic impact payments will be deposited directly into banking accounts listed on either the 2018 or 2019 tax returns. In coming weeks, the Treasury plans to develop a web-based portal so people can provide their banking information to the IRS online so they can receive payments immediately instead of checks in the mail.

Can Ohioans who are not typically required to file a tax return still receive a payment?

Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.

How can I file the tax return needed to receive my economic impact payment? will soon provide information instructing people in these groups how to file a 2019 tax return with information including their filing status, number of dependents and direct deposit bank account information.

I have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?

Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.

SOURCE: Internal Revenue Service, Republican Finance Committee staff

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