Economic Stimulus Questions Answered – updated Monday April 20

ECONOMIC IMPACT PAYMENTS

 

CAVEAT – This document represents my best attempt to summarize the recent legislation.  New information is being released on virtually a daily basis, so there is no guarantee that everything stated here will end up being correct from one day to the next.  The document is a summary and is not intended to discuss every detail of economic impact payments but is merely designed to give an overview.  This document represents my own interpretation of the legislation and the information released thus far from the IRS.  The document has not been reviewed or approved by the IRS.

 

CORONAVIRUS STIMULUS LEGISLATION

  • Congress recently passed legislation designed to stimulate the economy to offset some of the economic impact of the Coronavirus pandemic.
  • The legislation included a number of benefits for individuals and companies, including enhanced funding for state unemployment benefits, low interest loans to small employers to keep their employees employed, and the payment of “economic impact” payments to most Americans to give them an immediate cash benefit.
  • The following document explains this third benefit, the “economic impact payment.”

 

HOW MUCH ARE THE PAYMENTS?

  • The amount of the payments generally will be $1,200 per person, plus an additional $500 for each “qualifying child” under the age of 17 (a child with respect to whom the Child Tax Credit was or could be claimed on a 2019 tax return (or 2018 if 2019 not filed)).
  • Thus, a married couple with two children under the age of 17 would receive $3,400 ($2,400 for the couple plus $500 each for the children).
  • The amount of the payment is smaller or zero at higher income levels (for example, single people making more than $75,000, and married couples making more than $150,000). If your payment was smaller or zero due to your 2019 income but now your 2020 income is lower and would have resulted in a larger payment, the additional amount will be added as a credit to your 2020 tax return.

 

WHO WILL RECEIVE A PAYMENT?

  • In general, anyone who is both a U.S. Citizen or Resident and has a Social Security card that enables the person to work in the United States is entitled to a payment. A Resident is generally someone who lives in the U.S. for more than half the year.  A Social Security card that does not entitle the person to work in the U.S. (for example, a SS card with “Not Valid for Employment” on it) is not sufficient.  A SS number beginning with the number “9” is an Individual Taxpayer Identification Number (ITIN) and also does not satisfy this requirement.
  • The $500 payment for qualifying children under the age of 17 is based on their status as a qualifying child on the support provider’s 2019 tax return.

 

WHO WILL NOT RECEIVE A PAYMENT?

Any of the following persons:

  • A nonresident alien (generally didn’t live in the US more than half the year and not a Citizen or permanent resident of the US (Green Card holder)).
  • Anyone who can be claimed as a “dependent” on the tax return of another person. This would include children over the age of 16 who do not provide more than half of their own support and can be claimed by their parents as a dependent on the parents’ tax return for 2019.  This can also apply to elderly parents who are supported by a grown child.
  • A child born in 2020.
  • It appears that if a couple files a joint return and one of the spouses has a Social Security card that entitles the person to work in the U.S., but the other spouse does not, neither person will receive a payment. There is an exception to this result for active duty Military members where one of the spouses does not have a valid SSN.

 

WHAT DO I NEED TO DO TO RECEIVE A PAYMENT?

  • The following persons will automatically receive a payment:
    • An eligible person who has filed a tax return for 2018 or
    • Anyone who received Social Security, Social Security Disability Insurance Income, or Railroad Retirement Benefits in 2019. This has also been extended to Supplemental Security Income (SSI) and Veterans Affairs (VA) benefits. Note that if your SS payments (or other qualifying payments) did not begin until 2020, you will need to take further steps to receive a payment, as discussed below (although it is not clear whether this applies to SSI or VA benefits).
  • Anyone else who is entitled to a payment but does not satisfy either of these requirements must take further steps to receive the payment as described on the following pages.
  • Although someone who receives Social Security (or SSDI, RRB, SSI or VA Benefits) doesn’t need to do anything to receive a payment, there is an exception if they did not file a 2018 or 2019 return but could have claimed a Child Tax Credit for someone under the age of 17 had they filed such a return. In this case, they are also entitled to the $500 payment per such child.  In such a situation, the person must file the simplified information required for non-filers discussed below in order to receive the $500 payment for qualifying children.

 

WHAT IF I HAVEN’T FILED A 2018 OR 2019 TAX RETURN?

  • If you do not automatically qualify to receive a payment, are required to file a 2019 tax return (generally because you had income in excess of $12,200 for Single taxpayers, $18,350 for Head of Household taxpayers, or $24,400 for Married Filing Jointly taxpayers), but have not filed for 2019 or 2018, you MUST file a tax return for 2018 or 2019 to receive a payment and apparently you must do so this year as the payments are required to be made by December 31.
  • If you do not automatically qualify to receive a payment and your income was below the level required to file a return for 2019, you must either file a tax return or complete an online simplified return to receive your payment.
  • There is a potential issue for people who receive SS and should have filed but did not for 2018 and 2019. It appears that people in this situation will automatically receive a payment even though they did not file and should have, but this is not absolutely clear.  The only way to be certain of receiving a payment absent additional guidance is by filing a 2019 tax return.

 

IF I DIDN’T NEED TO FILE, WHAT DO I NEED TO DO TO GET A PAYMENT?

  • You must go online to create a simplified return for the IRS that gives the IRS the information needed to determine your right to the payment and to process the payment.
  • To get to the website for providing the information, go to www.irs.gov and click on the first item on the page “Non-Filers: Enter Payment Info Here.”
  • You will be required to establish a username and password.

 

 

 

WHAT INFORMATION IS REQUIRED?

The online form will request the following information:

  • Full name, current mailing address, phone number and an email address
  • Your tax filing status (only gives Single or Married Filing Jointly as options – choose Single if your filing status is not Married Filing Jointly)
  • Date of birth and valid Social Security number
  • Bank account number, type and routing number, if you have one (for Direct Deposit)
  • Identity Protection Personal Identification Number (IP PIN) you received from the IRS earlier this year, if you have one
  • Driver’s license or state-issued ID, if you have one
  • For each dependent under the age of 17: name, Social Security Number or Adoption Taxpayer Identification Number, and their relationship to you or your spouse
  • Your Adjusted Gross Income from your 2018 tax return (enter $0 if you weren’t required to file in 2018) or the 5-digit PIN you used to e-file your 2018 return

 

IS THE ECONOMIC IMPACT PAYMENT TAXABLE INCOME FOR 2020?          

  • NO, the payments will not be taxable. The payments are treated as a refund of taxes paid by the taxpayer as if they were additional amounts withheld.

 

HOW AND WHEN WILL THE PAYMENTS BE MADE?

  • The payments have already commenced and will continue to roll out over the next few weeks and months. The first payments will go to people who filed 2019 or 2018 tax returns and provided Direct Deposit info on the return.  SS recipients will supposedly come next and the last group to receive payments will generally be those receiving a paper check, with a priority to lower income persons.
  • If you provided Direct Deposit information on your 2018 or 2019 tax return, in the information you provided to the IRS for those not required to file, or through the “Get My Payment” tool discussed later, the payment will be made by Direct Deposit. If no bank information has been provided, the payment will be by check sent to your last known address.  Note that Direct Debit information on a tax return is not being accepted for making the payments by Direct Deposit.

 

HOW WILL PAYMENTS BE MADE TO SOCIAL SECURITY RECIPIENTS?

  • If you did not file a tax return for 2018 or 2019, but received Social Security, Social Security Disability Insurance Income, Railroad Retirement Benefits, Supplemental Security Income or Veterans Affairs Benefits in 2019, your payment will automatically be paid in the same form in which you receive your Social Security (or other qualifying governmental payment). So, if you receive your Social Security by Direct Deposit, you will automatically receive your economic impact payment by Direct Deposit.
  • In this situation, you cannot use the “Get My Payment” tool to enter bank information.

 

WHAT IF MY ADDRESS OR BANK ACCOUNT INFO HAS CHANGED?

  • If your address has changed, file a Change of Address form (Form 8822 – available online at irs.gov) with the IRS or send a letter to the IRS address where you sent your last tax return with your full name, Social Security Number, old address and new address. These requests take several weeks to process (even when the IRS is fully staffed), so it may not be processed before your payment is sent.  You can also try calling the IRS – good luck!
  • If your bank account info has changed, the IRS will send you a check in the mail if they attempt a Direct Deposit that fails.

 

WILL MY PAYMENT BE OFFSET BY AMOUNTS I OWE FOR BACK TAXES?

  • The payments can be offset only for past due child support payments.
  • All other offsets that normally apply to tax refunds, such as past due Federal or state taxes or student loan debt, will NOT apply to the economic impact payments.

 

HOW WILL I KNOW IF MY PAYMENT HAS BEEN MADE?

  • The IRS has also added on irs.gov a new tool called “Get My Payment” that will provide information about the status of your payment, including the date the payment will be deposited in your account or the check will be mailed once scheduled. If your payment has not already been scheduled, you can also enter bank account information on this tool in order to receive the payment more quickly by Direct Deposit. To get to the tool, go to irs.gov, and click on “Get My Payment” at the top of the right-hand column of topics.
  • The IRS will send a letter to the last known address of all payment recipients within 15 days of making the payment informing the person that the payment has been made, the amount of the payment, and how the payment was made. It will also provide information about what to do if you did not receive the payment.

 

WATCH OUT FOR SCAMS

  • The IRS has issued the following warnings about scams that have already popped up concerning the economic impact payments:
  • The IRS will not call, email or text you to verify or request your financial, banking or personal information.
  • Watch out for websites and social media attempts to request money or personal information. The official website is IRS.gov.
  • Don’t open surprise emails that look like they’re coming from the IRS or click on attachments or links.
  • Taxpayers should not provide personal or financial information or engage with potential scammers online or over the phone.
  • Forward suspicious emails to phishing@irs.gov, then delete.
  • Scammers may:
  • Ask an individual to sign over their Economic Impact Payment check to them.
  • Ask for verification of personal or banking information.
  • Suggest that they can get someone a tax refund or Economic Impact Payment faster by working on their behalf.
  • Issue a bogus check, often in an odd amount, then tell a person to call a number or verify information online in order to cash it.

 

HOW CAN I FILE A 2019 TAX RETURN?

  • There are a number of free file services available through irs.gov that you can use to file your Federal (and in some cases, state) taxes for free.
  • You can go to the free tax preparation services provided at the NHC Senior Resource Center, Main Library and Carolina Beach once these operations reopen. You can call (910) 798-6424 for further information.
  • You can go to a paid preparer.
  • The due date for 2019 tax returns has been extended to July 15 for all taxpayers.

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