02 Apr IRS STIMULUS CHECKS: WHAT TAXPAYERS NEED TO KNOW
What are the Economic Impact Payments?
Under a provision established under the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Economic Impact Payments (also known as stimulus checks) are Recovery Rebate payments to be distributed to individuals. The rebate checks are for $1,200 for a single individual and $2,400 for married filing jointly couples. Parents will also receive an additional $500 per qualifying child under the age of 17. The rebate checks are advance payments of a tax credit for your 2020 tax return.
Who is eligible for the payments?
U.S. resident individuals with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full stimulus check. For those taxpayers over the income limits, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. For those individuals with income exceeding $99,000 and $198,000 for the joint filers with no children, there will be no check issued.
Only those with a valid social security number and who are not claimed as a dependent on another return are eligible. There is no rebate amount for other dependents, such as children in college or elderly parents that you may claim as a dependent.
What information is used to calculate the credit?
For taxpayers who have filed either their 2019 or 2018 tax return, no further action will be required. The IRS will use the taxpayer’s Adjusted Gross Income (AGI) from their most recently filed Individual Income Tax Return (2019, if filed or alternatively 2018).
Individuals who typically do not file a tax return are still eligible for the credit. The IRS has created a new platform for non-filers to complete on their website which can be found at: https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here
Social security recipients that typically are not required to file tax returns do not need to file a 2019 tax return for purposes of the stimulus checks. Those payments will receive their payment directly to their bank account.
If you need to update information, such as a mailing address or bank account information, that can be done at :https://www.irs.gov/coronavirus/economic-impact-payments
How will payments be sent?
The IRS will calculate and automatically send the stimulus checks to all those that are eligible. The IRS will use the address on the taxpayer’s last filed return to deliver the check. In addition, if direct deposit information was provided on the last filed tax return, this banking information will be used to directly deposit the rebate amount.
Traditionally, directly deposited amounts from the IRS are received quicker than that paper mailed. To remedy this, the Treasury plans to develop in the coming weeks an online platform for individuals to provide their banking information to the IRS. This will allow for all individuals to receive their checks in faster, more immediate fashion.
When will the payments be issued?
The IRS has started sending out payments the week of April 15th for people with direct deposit information on file with the IRS.
How will this affect my 2020 income tax return?
The rebate itself is classified as an advance payment on a tax credit for taxpayers 2020 income tax return. On the 2020 Form 1040, taxpayers will be required to reconcile the payment received based on their 2020 income and dependents. Any underpayment of the stimulus checks due to certain changes in the taxpayer’s life in 2020, will be treated as a refundable credit on the tax return. This includes the birth of a child, change in filing status and a loss of income in 2020. Any overpayment of the stimulus check will not negatively affect the taxpayer’s 2020 tax return and will not be required to be repaid to the IRS.