The Moneyist: My children, who are all younger than 17, each received $1,200 stimulus checks — will the IRS penalize us if we keep them?

Dear Don,

Sometimes, the answer is in the question. Actually, often times the answer is in the question. Your letter asks if you were supposed to receive this money and you simultaneously wonder if you will be penalized for keeping it. In situations such as this, it’s always good to go with your gut.

The Internal Revenue Service is sending $1,200 to individuals with annual adjusted gross income below $75,000 and $2,400 to married couples filing taxes jointly who earn under $150,000, plus $500 per qualifying child, if they’re not working. Some 160 million checks have been sent out.

The payouts reduce in size above the $75,000 per year/$150,000 per year household income threshold and stop at $99,000 per year for individuals and $198,000 per year for married couples. The money will appear automatically in your bank account if the IRS has your account information.

I have received countless letters from people who have received no economic impact payment at all. Some taxpayers say they’ve received stimulus checks for dead relatives. Others have received more than one check and, like you, have wondered what they should do.

Also see: I received my ex-husband’s $1,200 stimulus check because we filed joint taxes in 2018. Should I give him the money or return it to the IRS?

Your can return the money via check or money order with the notation “2020EIP,” plus the Social Security number or taxpayer I.D. of the check recipient. Those people who received a paper check can write “void” on the back and mail it back to the IRS, according to the IRS directions (see Q41).

I understand that it’s very difficult to make ends meet during the lockdown, and many families are struggling. We are living in challenging and uncertain times. The whole world seems to have been turned upside down. People are on edge and, yes, many are desperate.

In 8 of the top 10 cities, the economic impact payment only covers between 60% and 71% of an estimated monthly budget for a family, this study found. The EIP is an advance payment of a 2020 tax credit. If you don’t return these payments, the IRS may adjust your 2020 return accordingly.

Nearly one-third (30%) of people said they used their stimulus checks to pay bills, according to a study released this week, another sign that Americans are struggling to make ends meet, particularly with more than 38 million people filing for unemployment since mid-March.

Those bills — including for cellphones, utilities, cable TV and rent — are the No. 1 priority, even more than purchasing essentials and “relief spending” on apparel, televisions, video games, sporting goods and toys at Walmart WMT, -0.80%, Costco COST, -1.17% and Target TGT, +1.38%.

IRS employees are essential workers. They’re working from offices and clearly doing their utmost to process all of these payments. If nothing else, the coronavirus pandemic may change Americans’ views of the IRS of an organization that is to be feared or disliked for taking cuts of our income.

Dispatches from a pandemic:Letter from New York: ‘New Yorkers wear colorful homemade masks, while nurses wear garbage bags’

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

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