Stimulus Checks: True-Up and Safe-Harbor Costs

ABSTRACT

Stimulus checks were sent in response to recent US recessions. These checks grew from about $40 billion in the 2001 recession to $800 billion in the COVID era. Prior studies, however, ignored additional stimulus received upon filing tax returns (true-ups) and safe harbors that prevent possible stimulus repayment. Using population-level tax data, I estimate true-up and safe-harbor costs and decompose them by reasons, such as changes in income or the number of children. True-ups and safe harbors are costly. For the three rounds of COVID-era stimulus, true-ups and safe harbors cost more than $130 billion.