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Coronavirus stimulus check: 6 ways to use your $1,200

Senate Republicans introduce a new relief package called the HEALS Act that would include another round of checks.

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Another round of checks might be coming. 

Patrick Holland/CNET
For the most up-to-date news and information about the coronavirus pandemic, visit the WHO website.

Sen. Mitch McConnell, a Republican from Kentucky, revealed the Republicans' HEALS Act -- it stands for Health, Economic Assistance, Liability Protection and Schools -- in the US Senate on Monday. It includes another round of Economic Impact Payments (EIP), known colloquially as stimulus checks, along with other relief for those affected by the COVID-19 pandemic. The requirements for the $1,200, and the additional $500 for dependents, remains roughly the same according to the bill

Back in March, US President Donald Trump signed an unprecedented $2.2 trillion relief bill that aimed to soften the financial impact that the coronavirus had on the US economy. It included a $1,200 stimulus check for most adults and $500 per dependent child. Individuals with an adjusted annual gross income of less than $75,000 or married couples with adjusted annual incomes of less than $150,000 will receive the full amount, while those earning more will see a reduced check based on their income. The IRS says it'll use taxpayers' 2019 tax returns, or 2018 returns, depending on which ones have been filed, to determine the amount. 

The Treasury Department told CBS News on April 3 that the date for disbursement for 50 million to 70 million Americans would be April 15. US Treasury Secretary Steven Mnuchin said during a press briefing April 13 that 80 million checks would be sent electronically. President Trump tweeted on April 30 that 120 million Economic Impact Payments had been sent out. A press release from the IRS on May 11 said 130 million individuals received their stimulus checks. 

The funds are sent via direct deposit using the banking information from a filer's latest tax return. Those who receive Social Security, disability, survivor or Railroad Retirement benefits will receive the money automatically. Five million paper checks will be sent each week, according to a memo from the House Ways and Means Committee obtained by the Associated Press on May 5. The Treasury Department said on May 18 that it'll use prepaid debit cards in lieu of paper checks. Recipients will be able to use the Visa cards to purchase items, withdraw from ATMs or transfer money to their own banking accounts without incurring fees. 

The web portal for nonfilers on the IRS website launched April 11. According to the page, US citizens and resident aliens are eligible for the stimulus funds if they: 

  • Have a valid Social Security number,
  • Couldn't be claimed as a dependent of another taxpayer and
  • Had adjusted gross income under certain limits.

Read more: Find out if you're eligible to receive a coronavirus stimulus check

On April 15, the Get My Payment tool launched on the IRS website. Individuals can input their details to track the status of their payment or find out if the agency needs direct deposit details. Those who don't have access to a bank account can use a payment platforms such as PayPal and Square's Cash app that are providing routing and account numbers to send the money into the users' accounts. If people haven't received stimulus funds yet, they're advised to visit the IRS page to check the status. There could be different reasons why they didn't receive a payment, such as filing taxes via a third party, or their 2019 return hasn't been processed yet.

For many, such as the more than 44 million who've filed for unemployment benefits since mid-March, this money will offer needed support during the pandemic although the extra $600 from the CARES Act will go away July 31. For others, the funds will be more supplemental, at least for now. 

For those who are awaiting a second payment or saved up the first, here are six ways to make the best use of your stimulus check. 

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1. Take care of your immediate needs

Above all else, make sure your immediate needs are met. This includes food, monthly bills, and rent or mortgage. But before you prioritize rent over, say, food, consider that many jurisdictions, utility companies and even banks are offering relief due to the outbreak. See which programs you can take advantage of, then allocate funds accordingly. 

2. Pay your taxes

Treasury Secretary Mnuchin announced on March 20 that the deadline for filing and paying income taxes has been pushed back to July 15. Those who haven't filed -- and will owe the government money -- could use the stimulus check to cover the tax payment. If you haven't already saved for federal and state income taxes and are facing financial hardship, consider giving the money right back to the government. 

Read more: Best tax software for 2020: TurboTax, H&R Block, TaxSlayer and more

3. Reduce your debt

One way to secure your financial future is to reduce your debt. A significant payment made to pay down a credit card and loan will help reduce the amount of interest paid on an account carrying a balance. The less interest you have to pay, the more funds you'll have available in the future. But before you do that, check with the debt holders, because some are offering relief, including deferred payments and waived interest. Just be sure to read the fine print, as some of the assistance offered could delay interest rather than forgive it. 

4. Start or add to an existing emergency fund 

It can't be stressed enough how important it is to have an emergency fund. As this outbreak shows, the world can change very quickly. The fund should be equal to the amount of money spent on expenses for three to six months. While the $1,200 likely won't cover that entire amount, it can be used as a starting point. A simple savings account can be used to keep the money safe. 

5. Give to those in need

Those fortunate enough to find themselves not needing any of the $1,200 for themselves should consider giving it to people who do. There are many charities fighting the pandemic, such as food banks and hospitals. Another consideration is to help out friends and family members who've been hit hard by the pandemic. 

6. Open a long-term investment account for your children

Part of the stimulus package provides an additional $500 per child. If your family is already comfortable, there's a way to make use of that money to help your kids' future. 

"Provided you don't need this money, consider opening a 529 plan for your child," said certified financial planner Marguerita Cheng. "Your state may offer a tax benefit. This money can grow tax-free. If appropriate, you can even contribute modest amounts of, say, $50 to $100 regularly."

To start a 529 plan, contact your bank or investment firm to see what they have available and what benefits will come your way if you open one up.