When President Trump signed the CARES Act, into law, he initiated a $2 trillion stimulus package and part of that package is one-time cash payments of up to $1,200 to Americans who qualify. An extra $1,200, sounds great, right? But with the announcement of the cash came the questions: What is it? Who gets it? How much will I get? Is it taxable? What do I have to do to get it? Here is what you need to know.
What is a coronavirus stimulus check?
The actual payment goes by several names. The IRS is calling it an “economic impact payment,” the government has named it a “recovery rebate,” and many people are calling it a “stimulus check.” But the payment is technically an advance tax credit meant to offset your 2020 federal income taxes.
Who is eligible for the economic impact payment?
Tax filers 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 payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible. Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return. Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.
How will the IRS know where to send my payment?
Most people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those who are eligible. For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same bank account reflected on the return filed.
What if I don’t direct deposit my tax refund?
If you the IRS does not have your direct deposit information from your taxes, the 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. Keep an eye out on our Facebook page or our Coronavirus Resource page on our website for a link to that portal.
Does my stimulus payment affect my tax return for 2020?
This money is not considered income. It won’t be taxable, and it won’t affect your income tax bracket for 2020. This stimulus check is a special tax credit that’ll appear on the tax return you file in 2021 for the 2020 tax year — a tax credit that wouldn’t have been there if it wasn’t for these stimulus checks. So, the Internal Revenue Service isn’t giving you your 2020 tax refund up front. The stimulus check will be in addition to what you would’ve otherwise expected.
For many Americans, stimulus payments will arrive soon. Some of you may have already received them. Be sure to stay up to date on information that pertains to your stimulus payment, including the new pandemic fraud and scam schemes that are popping up.