Over the next week or two, I hope to write several blogs about the CARES ACT. The Cares Act was passed by Congress and signed into law by the President on March 27th. It contains a number of initiatives, with the goal of providing financial relief, to both individual and business taxpayers, and comes at a cost of $2+ Trillion. While it is extensive piece of legislation that covers a wide variety of areas, most focus has been on the Individual “Stimulus Payments” since those payments impact most of America. In this article, I’ll attempt to explain what the “Stimulus Payments” are and aren’t, the amount to expect to receive, and who will get it.
What are the Individual “Stimulus Payments”?
While it appears that the government is handing out payments, the payments are really advance payments against tax credits to be taken on taxpayers 2020 tax returns. As opposed to getting the credit later, taxpayers will get it advanced today. The IRS is referring to these payments as Economic Impact Payments.
How Much is It and what are the Income limitations?
The advance payments are $1,200 for qualifying individual taxpayers, $2,400 for Married Taxpayers Filing Jointly, and $500 for each qualifying child. These are means tested and begin phasing out after $75,000 adjusted gross income (AGI) (single), $112,500, (HoH), and $150,000 (MFJ). They phase out by $5 for each $100 a taxpayers income exceeds the phase-out threshold and are phased out completely at $99,000 (single), $146,500 (HOH), and $198,000 (MFJ).
Who Won’t Qualify?
First, anyone claimed as a dependent on another’s return, even if they’re an adult, does not qualify. In most cases, you must have a Social Security number to qualify. You may not receive an advance payment if you haven’t filed your 2018 or 2019 tax return, the government may identify and send you an advance check, although you will still get the credit when you file your 2020 return. If you were not required to file a tax return and are on Social Security, that should not be an issue.
Can I still file my 2018 and/or 2019 tax return now if I haven’t filed yet?
If you file these returns in the upcoming months, the advance payments will be available throughout 2020.
If you are interested in learning more about the Economic Impact Payments, please visit the IRS’s page on the subject at https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know.
Do you Need Help?
If you are need of professional help with tax issues or IRS or state tax debt issues, please contact me at (972) 821-1991 or at [email protected].
