Money Direct to Residents: Making Sense of CARES Act Payments

The federal government will be sending money directly to people as part of the recently passed Coronavirus Aid, Relief, and Economic Security Act or the CARES Act. Local leaders can take action now to make sure their residents keep more of those dollars in their pockets that can be spent in the local economy. 

What is Coming 

The funds being made available to individuals is an advance on their tax refunds for 2021. Those that earned less than $75,000 in 2019 will be eligible for the full $1,200. Couples who filed jointly and earned less than $150,000 will get $2,400. An additional $500 per child will also be provided. If a person earned more than the limits their payment will be reduced by $5 for every $100 of income that exceeds the limit. The IRS will use the information on Form SSA-1099 or Form RBB-1099 to determine the eligibility of retired people for funds. As of now, the timeline for these funds getting out is a few weeks away via direct deposit for those who have filed their 2019 returns. For those who have not filed their taxes in the last two years, the IRS is creating a web-based portal where they can verify where they would like their funds sent. At this time, it is unclear if individuals whose tax refund went to a paid tax preparer in exchange for a rapid anticipation loan or those that had their tax refund sent to a prepaid debit card should verify their information on the IRS web-based portal. 

The IRS has created a webpage that will be updated with information about the stimulus payment. 

City Action 

Forty percent of Americans don’t have $400 set aside to pay for unexpected expenses. As the federal government finalizes cash assistance directly to residents, cities can play an important role to make sure that their residents access these funds through safe affordable means. Right now, 6% of Americans are unbanked and 16% underbankedThose that are underbanked are individuals who manage their financial lives through alternative financial services like cash checkers, who often charge high fees, so less money goes into these individuals’ pockets

Communities across the country have been working to increase the number of residents in their cities who are connected to safe and affordable banking services through the national BankOn programAccess to reliable banking services and mobile banking has become critical as we continue physical distancing necessary as a result of the COVID-19 crisis. City leaders can take action now to help their residents keep more of these dollars in their pocket and within the community. 

City leaders can: 

Virtually convene local financial service providers (i.e. banks of all sizes and credit unions) and paid tax preparers (i.e. Volunteer Tax Assistance Program providers) to confirm what services they are providing to their clients and their ability to take on new clients. During this virtual convening, discuss how the city can lift up their services (i.e. newsletter, text message or space on city COVID-19 webpage) and create messaging that will help the community understand the importance of banking at this moment (e.g. your money: keep more of it). 

Leverage local relationships with the financial service providers to decrease the barriers that residents can face when signing up for banking services (i.e. waive fees or minimum balance requirements) and connect with national BankOn products or where possible local options. This could also mean asking banks or credit unions to do “pop-up” events at essential sites where possible, allowing them the ability to showcase the value of their products while still maintaining physical distancing. 

Ask people through city communication channels like social media or texts to file their taxes soon via a non-predatory tax preparer by going through VITA or the IRS Free File program. The VITA programs across the country who traditionally serve clients in person are working to move to virtual assistance; traditionally they offer the highestrated accuracy rate amongst preparers without any fees. For those that file their taxes and receive a refund, this action would provide an additional payment, but also make sure that the IRS has their correct banking information. 

Make sure that their residents are aware of scammers that are trying to take advantage of the COVID-19 pandemic to secure some of their stimulus funds. 

Connect city employees to nonpredatory financial products to further your staff’s financial resiliency. The City of Little Rock in partnership with Bank On Arkansas+ will provide access to free checking accounts through bank partners for nearly 200 employees impacted by COVID-19 who previously received paper checks for their biweekly paychecks. 

Provide relief directly to residents. The City of Chicago created a COVID-19 Housing Assistance Grant for individuals and families impacted by the economic fallout due to Coronavirus. Half of the dollars are going to individuals directly via a lottery and the rest being distributed by nonprofits. These funds are being sent out via direct deposit as well as PayPal or CashApp accounts. 

The CARES Act is the latest piece of federal action to help communities come to terms with COVID-19. This will not be the last and NLC will continue to keep local leaders up-to-date on future work as it comes forward. 

About the Authors

Patrick Hain small

Patrick Hain is the Program Manager for Financial Empowerment in the NLC Institute for Youth, Education, and Families.



Courtney CoffinCourtney Coffin is the Senior Associate for Economic Opportunity and Financial Empowerment in the NLC Institute for Youth, Education, and Families.



 Michael-Wallace-small.jpgMichael Wallace is the Legislative Director for Community and Economic Development at the National League of Cities. Follow him on Twitter @MikeWallaceII.