There’s a lot of relief packed into the 880-page, $2.2 trillion CARES Act. Also, a lot of information.
Of the monumental response to the COVID-19 crisis tucked into the new law’s pages, perhaps the part eliciting the most questions is the economic impact payments, a promised $1,200 stimulus check to every taxpaying American adult, plus $500 per child.
These promised checks are expected to direct deposit into people’s bank accounts by end of April, and they could mean a much-needed boost for an economy where many are out of work or seeing less work than they were just a few short weeks ago.
How do citizens get those funds? And who qualifies?
According to the IRS’s website, tax filers with adjusted gross income up to $75,000 will receive full payment of $1,200. The law works slightly differently for married couples that file jointly. Those couples may make up to $150,000 adjusted gross income to receive the full payment. In that case, the couple will receive $2,400.
There is also an additional payment of $500 for every child claimed on taxes.
For every $100 more than the listed amount a taxpayer makes, the payment is reduced by $5. So, anyone making more than $99,000 or joint filers making more than $198,000 will not be eligible for the payment. They will, however, be eligible for the additional $500 per child.
How will I receive the payment? What if I don’t typically file taxes?
Sharon Jones is the franchise owner of the Navarre H&R Block. She said most taxpayers will not need to do anything to receive their economic impact payments.
The IRS will be using the direct deposit information provided on 2018 or 2019 tax returns to dole out checks.
So, what if the information on your 2018 tax return has changed, for example a divorce or switching banks? Or what if you didn’t provide direct deposit information?
“You might file a 2019 to try and update that information, but it is my understanding the IRS will have a portal on their website to make these changes,” Jones explained.
That portal will allow taxpayers to provide their bank information and has not yet gone live on the IRS website. Their website says the portal will be made available “in the coming weeks.”
For those that do not typically file taxes and have no obligation to file, they do not need to act.
“If you haven’t filed a 2018 or a 2019 then you should be filing, not including Social Security and Railroad Retirement recipients. They do not need to file,” Jones said.
Those who do not typically fill out taxes but receive benefits reflected in the Form SSA-1099 or Form RRB-1099 (Social Security and Railroad Retirement) will receive their stimulus payments through the same mechanism they currently receive benefits.
Is the payment taxed?
The simple answer is no, but taxpayers will still need to keep documentation.
“It is not going to be taxed the way we understand it; however, you are going to have to indicate it on your 2020 tax return,” Jones said.
When will I receive my economic impact payment? What about my 2019 taxes overall?
For those that have not already filed their 2019 taxes, the deadline has been extended until July 15 due to COVID-19. Jones said they have extended hours and will be open year-round to assist with making filings. She said she hopes folks move quickly to get their taxes filed.
Those that have already filed either 2019 or 2018 tax returns with direct deposit information can expect to receive their payments direct deposited starting by about April 20. Those updating information through the web portal or who have not filed their 2019 taxes may see some delay in receiving payments.
The one-time economic impact payments will be available for taxpaying citizens to claim throughout the rest of 2020.
For updates on the web portal and other information, go to the IRS’s online information board at IRS.gov/coronavirus.
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