Learn About Stimulus Payments and Disability Benefits

Understanding Economic Impact Payments

Economic Impact Payments, often called stimulus checks, were direct cash transfers sent to millions of Americans during periods of economic hardship. The U.S. government distributed these payments in response to the COVID-19 pandemic to help people pay for essential expenses. The payments came in three main rounds: the first in 2020, the second in late 2020 and early 2021, and the third in 2021.

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The first round of payments sent $1,200 to many adults and $500 per qualifying child. The second round provided $600 per adult and $600 per child. The third round increased to $1,400 per adult and $1,400 per child. These amounts varied based on income levels, with higher earners receiving reduced amounts or nothing at all.

The government used tax filing information from previous years to determine who received payments. Most people received their money through direct deposit to their bank accounts, though some received paper checks or debit cards. The Internal Revenue Service (IRS) mailed checks and debit cards to people who had not provided bank information in recent tax filings.

Many people received their payments automatically without taking any action. However, some individuals—particularly those who did not file taxes regularly, experienced homelessness, or had other barriers to contact—needed to take steps to receive their payments. The IRS created tools on its website to help people track their payments and understand their status.

Understanding how these payments worked is important for several reasons. First, anyone who did not receive a payment they believed they should have received may still be able to claim it on their tax return. Second, knowing how the government distributed these funds shows how economic relief programs operate. Third, this information provides context for understanding potential future payment programs.

Practical Takeaway: If you did not receive stimulus payments between 2020 and 2021, you may be able to claim the missing amounts on your federal income tax return. You can request a transcript from the IRS showing which payments you received and contact the IRS if you believe payments were sent to an incorrect address or account.

How Stimulus Payments Affected Tax Returns

One important aspect of stimulus payments is that they were not considered income for tax purposes. This means receiving a payment did not increase the amount of taxes someone owed, and it did not reduce refunds people would normally receive. The payments were structured as advance payments on a tax credit rather than taxable income.

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However, the relationship between payments and taxes became complex when people moved, changed banks, or updated their address. If someone received a payment at an old address and did not retrieve it, they could potentially claim the payment as a credit on their tax return. Similarly, if the IRS sent multiple payments to the same person by mistake, that person needed to report it when filing taxes.

People who received more in payments than they should have faced a situation where the excess amounts had to be repaid. However, Congress provided protections during the pandemic. Initially, people who received excess payments were not required to repay them, though this changed for the third round of payments. Even then, repayment obligations were limited, and people could claim hardship exceptions on their tax returns.

The tax filing process after receiving stimulus payments was straightforward for most people. When filing federal income taxes, people could use IRS forms and worksheets to reconcile what they received with what they should have received. The IRS provided line-by-line instructions on tax forms to help people report stimulus payment information accurately.

Filing taxes after receiving stimulus payments also meant accessing records about which payment method was used. People who received payments through direct deposit had bank records. Those who received paper checks or debit cards needed to reference IRS records or payment confirmation emails. Some people received multiple payments through different methods, requiring careful tracking of all amounts.

Practical Takeaway: When preparing your tax return, gather records of all stimulus payments received, including bank statements, check stubs, and IRS correspondence. The IRS provides a Payment Status Tracking tool online that shows the dates and amounts of payments sent. Use this information to report payments accurately on your tax form and claim any missing payments.

Disability Benefits and How They Work

Disability benefits provide monthly payments to people who have severe medical conditions that prevent them from working. The Social Security Administration (SSA) administers two main disability programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Both programs serve different populations and have different rules, but both help people meet basic living expenses when they cannot work.

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Social Security Disability Insurance is available to people who have worked and paid Social Security taxes for a sufficient period. The amount someone receives through SSDI depends on their prior earnings history. Workers who paid more in Social Security taxes over many years typically receive higher monthly payments. The average SSDI payment in 2024 was around $1,550 per month, though amounts varied significantly based on individual work histories.

Supplemental Security Income is a needs-based program that serves people with disabilities who have limited income and resources, regardless of work history. SSI is particularly important for people who became disabled before working age or who never accumulated enough work credits for SSDI. The federal SSI payment in 2024 was $943 per month, and many states added supplemental payments on top of the federal amount.

Both programs use the same medical standard to determine disability: the condition must be severe enough to prevent substantial gainful activity and must be expected to last at least 12 months or result in death. The SSA does not simply take applicants' word for disabilities. Instead, the agency reviews extensive medical evidence, including doctor's reports, hospital records, test results, and treatment history.

The application process for disability benefits involves gathering medical evidence and submitting it to the SSA. People must show they have received ongoing medical treatment and that their condition meets the severity standard. The SSA has a "Blue Book" that lists impairments considered severe enough to meet the disability standard, but applicants can show disability through other evidence even if their condition is not in the Blue Book.

Practical Takeaway: Before contacting the SSA about disability benefits, gather all recent medical records, including diagnoses, treatment dates, and doctors' contact information. Document how your condition affects your ability to work and perform daily activities. The SSA website provides detailed information about what medical evidence helps the agency make decisions.

Understanding SSDI Work Incentives and Continued Benefits

One important aspect of disability benefits that many people misunderstand is that the programs include work incentives. Social Security does not want people to remain unemployed simply because they receive disability benefits. Instead, the SSA created rules that allow people to try working while keeping their benefits, at least temporarily.

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The Work Incentives Planning and Assistance (WIPA) program offers free counseling to help disability beneficiaries understand how working affects their benefits. Each state has WIPA projects staffed by work incentive specialists who can explain the rules in plain language. These specialists help people avoid making decisions that accidentally cause them to lose benefits they need.

One key work incentive is the Trial Work Period. For SSDI recipients, this is a nine-month period during which they can work and earn money without losing their disability benefits, regardless of how much they earn. The only requirement is that they report their work to Social Security. After the Trial Work Period ends, Social Security continues paying benefits during a 36-month Extended Period of Eligibility, though at that point, earnings above a certain limit reduce benefits.

Another important rule is Impairment-Related Work Expenses (IRWE). If someone's disability requires them to spend money on work-related support—such as special transportation, medical devices, or attendant care needed specifically to work—those expenses may be deducted from earnings when Social Security calculates benefit reductions. This rule helps ensure that people who need extra support to work are not penalized financially.

Plans to Achieve Self-Support (PASS) is a work incentive specifically for SSI recipients. A PASS plan allows someone to set aside income and resources for a specific occupational goal without those assets counting against SSI resource limits. For example, someone might use a PASS plan to save money for education or training that would help them work. WIPA specialists and Social Security work incentive planners can help develop PASS plans.

Practical Takeaway: If you receive disability benefits and want to work, contact your local WIPA office before starting work or significantly increasing hours. These free services help you understand how earnings affect your