Economic Impact Payments authorized through the CARES Act should start rolling out this week to some taxpayers.
U.S. residents will receive the Economic Impact Payment of $1,200 for individual or head of household filers, and $2,400 for married filing jointly if they are not a dependent of another taxpayer and have a work eligible Social Security number with adjusted gross income up to:
$75,000 for individuals
$112,500 for head of household filers and
$150,000 for married couples filing joint returns
Taxpayers will receive a reduced payment if their AGI is between:
$75,000 and $99,000 if their filing status was single or married filing separately
112,500 and $136,500 for head of household
$150,000 and $198,000 if their filing status was married filing jointly
The amount of the reduced payment will be based upon the taxpayers specific adjusted gross income. For which tax year though? According to IRS they will use the 2019 return if it has been filed, but if you haven't filed for 2019, they will use your 2018 return.
Eligible retirees and recipients of Social Security, Railroad Retirement, disability or veterans' benefits as well as taxpayers who do not make enough money to normally have to file a tax return will receive a payment. This also includes those who have no income, as well as those whose income comes entirely from certain benefit programs, such as Supplemental Security Income benefits.
Retirees who receive either Social Security retirement or Railroad Retirement benefits will also receive payments automatically.
The million-dollar question who WILL NOT be receiving a stimulus check.
Here is a list of 10 groups Who Won't Be Receiving an Economic Impact Payment
Your adjusted gross income is greater than:
$99,000 if your filing status was single or married filing separately
$136,500 for head of household
$198,000 if your filing status was married filing jointly
If you filed your 2019 return, the IRS will use your 2019 return to determine your payment amount, but if you haven’t filed 2019, they will use 2018 to determine your stimulus check. Therefore, if you are over the threshold for 2019 but under in 2018, you might want to hold off on filing your return. Conversely if you are over the threshold in 2018 but under in 2019 you need to file right away. It is unclear when the IRS will “cut- off” for Economic Impact payment determinations.
2. College students claimed as a dependent on your parent’s return
If you were claimed as a dependent on your parents return you will not receive a stimulus check, and if you are over 16, your parents won’t receive one for you either. You cannot file and claim yourself unless you provided over 50% of your own support. Also your parents receive a credit typically for claiming you on their return, so you will need to consult with a CPA to determine how you should file. If you were a dependent in 2018 but provided your own support in 2019 you need to file right away. Again, it is unclear when the IRS will “cut-off” for Economic Impact payment determinations.
3. Elderly parents claimed as a dependent on their caregiver’s return
If you were claimed as a dependent on your child’s return you will not receive a stimulus check, and your caregiver won’t receive one for you either. Same as noted with college students, you cannot file and claim yourself unless you provided over 50% of your own support. Also your caregiver receives a credit typically for claiming you on their return, so you will need to consult with a CPA to determine how you should file.
4. You do not have a valid Social Security number
5. You have an ITIN
6. You filed Form 1040-NR or Form 1040NR-EZ, Form 1040-PR or Form 1040-SS for 2019
7. You are behind on child support
8. You haven’t filed either a 2018 or 2019 tax return and you should have filed
If you haven’t filed but you should have in 2019, and you haven't filed for 2018 either, you may still be able to file and receive a stimulus check, but it is urgent that you do so. You do not have to file 2019 to get your stimulus check just one or the other (2018 or 2019). If you are below the filing threshold or receive Social Security or Disability as mentioned before, you do not have to file. You can go to the Economic Impact Portal and update your information to receive your direct deposit.
9. You filed for 2018 but not 2019 and had a child in 2019
You will receive your stimulus for yourself, but it will NOT include an amount for your child that was born in 2019. To resolve this, you need to file right away. Again, it is unclear when the IRS will “cut-off” for Economic Impact payment determinations.
10. You have never used direct deposit/automatic withdrawal
If you have never used direct deposit or automatic withdrawal when filing a return, then you will not receive your Economic Impact payment electronically. You will have to wait for a paper check which is rumored to take weeks! The IRS is releasing a portal to provide banking information here and it should go live on April 17th.
In the end, the Economic Impact Payment is essentially an advance of a credit that will be applied to your 2020 income tax return. It is believed that if you received too little in your payment now, you will be credited the difference on your 2020 return. Conversely, if you received TOO MUCH, it is my understanding right now that you will not have to pay that back when you file 2020. However, more guidance is needed to say that with confidence.
If you need assistance filing your taxes, please reach out to our team!