With the Corona Virus hitting the USA hard, it is a trying time for us; and as seems, we are in for a long haul ahead.
With Corona in the air, things got really messy, with people losing jobs in an environment of fear and uncertainty. Times are tough, and it was heartening to see the government acting fast to clear the CARES act, which the President signed on Mar 27, 2020. How does this Act impact the US taxpayers and you?
Eligibility for the Economic Impact Payment
I am sure you are clear, as to the Economic Impact Payment or stimulus amount you can expect. Here it is again: The threshold is $75,000 for taxpayers filing S, MFS, or QW; $112,500 for taxpayer filing HoH, and $150,000 for taxpayers filing MFJ. Thus If your AGI is less than 75K (filed single) or 150K (filed MFJ) you can expect the whole amount of $1200 per person. The Economic Impact Payment will phase out for AGI between 75K and 99K if filing single, 136.5K for HoH and 198K for MFJ.
The amount received would be $1200 per adult, and $500 for each child. Thus a family with parents filing MFJ with two children can expect $3400 if their AGI is less than $150,000. Their stimulus amount will be reduced by 5% over this threshold amount, in case AGI is more than this amount upto the point where there would be no money (99K/136.5K/198K for S/HoH/MFJ).
The Economic Impact Payment will be based on 2019 tax return. If 2019 return is not yet filed, it will be based on 2018 income tax return. If you did not file your 2018 or 2019 return, you will still get the Economic Impact Payment if you had Social Security retirement income on 1099.
How will IRS send payments?
If you had filed the 2019 (or 2018) return and had given their account No to IRS for direct deposit/debit, the money will go to the bank account directly (advantageous as the money will come in faster). You need to do nothing; just sit and wait for the money.
What if the IRS does not have direct deposit information?
In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.
Other ways to get the money
If not, then a check will be sent on the address on the tax return. If you do not get the credit now, you can claim it on the 2020 tax return (filed in early 2021).
Within 15 days after the rebate is sent, IRS will send a letter in the mail to every taxpayer notifying them of the amount of the Advance Rebate, how it was paid to them, and a number to call if there are issues.
If you are not typically required to file a tax return. Can you still receive payment?
Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax when they file the simple tax return.
How can you file the tax return needed to receive my economic impact payment?
IRS.gov/coronavirus will soon provide information instructing people in these groups on how to file a 2019 tax return with simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.
If you only had retirement income, and had no earned income in 2019, will you still get the economic impact payment?
Yes, you will. It just depends on the AGI on the return, irrespective of where it came from.
If you have not filed my tax return for 2018 or 2019. Can you still receive an economic impact payment?
Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.
Some other aspects of the CARES act that might be of interest:
- Charitable contributions of upto $300 can be claimed on 2020 return without having to itemize.
- IRA contribution for 2019 can be made till Jul 15, 2020 (I would not take a chance with this though)
- In case you are not able to get the stimulus payment now for some reason, this can be claimed on the 2020 return
- Businesses can get loans cover payroll costs, and employee retention (not covered here)
Warm regards, andstay safe