Economic Impact Payments and What You Need To Know
The country has definitely had a rough start to 2020. At the moment, many countries around the world are staying home and altering their lifestyle to help combat the coronavirus that has affected thousands of people globally. In a direct response to help the economy during this difficult phase we are going through the Department of the Treasury and the Internal Revenue Service have since enacted the CARES act which provides relief to businesses and individuals. One of the many benefits of the CARES act that directly impacts taxpayers is the Economic Impact Payments. Below we are going to try to answer some of the most frequently asked questions.
Q1. Who qualifies for the Economic Impact Payment?
Citizens and Residents of the United States that have a work eligible Social Security number with adjusted gross income (AGI) of up to:
• $75,000 for individuals
• $112,500 for head of household filers and
• $150,000 for married couples filing jointly
The amount will be reduced by $5 for every $100 above those income limits. However, the credit phases out (eliminated) when those income levels reach these heights:
• $99,001 if filing single or married filing separately
• $136,501 for head of household and
• $198,001 if married filing jointly
Q2. What about people who receive Social Security benefits, Railroad Retirement, Disability, or Veterans benefits?
People who are already receiving these benefits, and are usually not required to file their taxes, will be receiving their payments automatically. This also includes people who do not earn enough income to be required to file a tax return. If you are already receiving these benefits, you will receive your payment in the same way you receive your monthly benefits.
Q3. Who is NOT eligible to receive the Economic Impact Payment?
The income limits for the credit will cover many taxpayers, however there are people whose incomes exceed these limits and will not be able to collect a payment as stated above. Another group of people who will not be entitled to this payment are individuals who have an Individual Taxpayer Identification Number (ITIN). The Economic Impact Payment only applies to individuals with a valid Social Security number. Unfortunately, this rule also applies to dependent children who do not have a valid Social Security number. Although the IRS will be giving additional amounts per dependent child, a dependent who is older than 16 regardless if they are a student and file taxes for the income they earned, will not be eligible for this credit. This means that a student age 17-24 who continues to be claimed as a dependent will not be receiving the Economic Impact Payment. In order to receive it, they must file their 2019 tax return as a separate individual.
Q4. How much will my Economic Impact Payment be?
Eligible individuals with gross income of up to $75,000 for single filers, $112,500 for head of household, and $150,000 for married couples who file together will be receiving the maximum amount of the credit which comes out to be $1,200 for individuals, and $2,400 for married couples. In addition, these taxpayers will also be receiving $500 per dependent child under 17 years old. As stated earlier, taxpayers whose income exceeds the $75,000/$112,500/$150,000 limits, will be receiving a reduced credit amount. The credit will be reduced by $5 for every $100 that is over those income limits.
Q5. What do I need to do in order to qualify?
If you are eligible based on the criteria above, you may be wondering what is required of you in order to get this check from the IRS. For those who are not usually required to file taxes, either because their income is too low, or their only income is Social Security or pension benefits, the IRS recommends to file a "Simple" return. You can visit their website here that guides you through what is needed. For everyone else who has not filed taxes for 2018 or 2019, the IRS recommends you file your return in order to receive the check. You will be receiving the Economic Impact Payment in the same way you have normally received your refund. For example, if you usually have your refund go to your address, that is the information the IRS will use to send your check. If you do direct deposit, they will send to the last bank account information they have on file. If you have not done your taxes for 2019, do not worry. The IRS will go based on the information obtained in your 2018 return.
Q6. What if my address has changed or my bank account information is different?
If either of these scenarios apply to you, again do not worry. The Internal Revenue Service has implemented a platform with you in mind where you can enter your most recent information to be able to receive your payment whichever way you prefer. This also applies to individuals who received their tax refund by mail but wish to receive their Economic Impact Payment by direct deposit. The platform will be available by mid April 2020. Follow this link to the Get My Payment platform to update your information.
Most taxpayers will not need to do anything in order to receive their payment. However, for those who have not filed taxes in either 2018 or 2019 they must take action in order to participate. If you need any help filing either year, or have additional questions, feel free to get in contact with us and one of our team members will be more than happy to assist you.