Stimulus Payment FAQs
How big will each payment be?
Most adults will receive $1,200, although some will receive less. An additional $500 will be included for every child.
How many payments are expected?
One payment. Future bills may allow for additional payments. This is barring any future Stimulus Packages.
How do I know if I qualify for the full amount?
It all depends on your income. For single adults with Social Security numbers and an adjusted gross income of $75,000 or less, they will get the full amount. Married couples without children who earn $150,000 or less will receive a total of $2,400. Taxpayers filing as head of household will qualify for the full payment if they earned $112,500 or less.
If your income is above those figures, the payment amounts will decrease until they stop altogether for single people earning $99,000 or more, and for married people who have no children and earn $198,000 or more. According to the Senate Finance Committee, a family with two children would not qualify for any payments if the family’s income surpasses $218,000.
If someone claims you as a dependent, even if you are an adult, you can’t get a payment. In most cases, everyone in the family must have a valid Social Security number in order to be eligible for payments. Members of the military are an exception.
If you need to locate your adjusted gross income, you can find it on Line 8b of the 2019 1040 federal tax return.
Will the IRS know where to send my payment?
To receive their payments, the majority of people won’t need to take any action. The IRS plans to calculate and automatically send the economic impact payments to those eligible. The payment from the IRS will be deposited directly into the same banking account reflected on your last return filed. If you have already filed your 2019 tax return, the IRS will use the information to calculate your payment amount. If you have not yet filed your 2019 tax return, the IRS will use the information from your 2018 tax filing to calculate the payment.
If the IRS does not have my direct deposit information, what can I do?
So that individuals can receive payments immediately, as opposed to checks in the mail, in the coming weeks, the Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online.
If I am not required to file a tax return, can I still receive my payment?
Yes. If you typically do not file a tax return, you will need to file a simple tax return to receive an economic impact payment. This includes low-income taxpayers, senior citizens, Social Security recipients, some veterans, as well as some individuals with disabilities who are otherwise not required to file a tax return. You will not owe tax on the simple return.
How can I file a tax return to receive my economic impact payment?
J. David Tax Law can file any past years of back taxes for individuals and businesses whether it be a couple of years or ten years of taxes that are unfiled.
I have not filed my 2018 or 2019 tax returns. Can I still receive an economic impact payment?
Yes. The IRS is urging anyone who has a tax filing obligation and has not yet filed a tax return for 2018 or 2019 to file as soon as possible so they can receive an economic impact payment. For immediate payments, taxpayers should include direct deposit banking information on the tax return.
I need to file a tax return. How long are the economic impact payments available?
If you are concerned about visiting a tax professional or local community organization in person for help filing a tax return, the economic impact payments are available for the remainder of 2020.
Will college students get a payment?
Not if someone claims them as a dependent on a tax return. If the student is under the age of 24, usually they are considered dependents in the eyes of the taxing authorities, provided the parent pays at least half of the student’s expenses.
What if my 2019 income made me ineligible, but due to a loss of income in 2020 I would be eligible, can I get a payment?
You may benefit once you file your 2020 taxes, but currently, the bill does not include losses in 2020. The payments are technically an advance on a tax credit that is available for the entire 2020 year. Your payments depend on how much you earn.
The legislation provides many other provisions if you are ineligible. Unemployment is available for employees or there are new loans available for small business owners and sole proprietors.
Is there an application required for payment?
No. Provided the IRS has your bank account information, they will transfer the money to you via direct deposit based on the recent income-tax figures they have in your 2018 or 2019 return.
When will payments arrive?
Treasury Secretary Steven Mnuchin said most people will get their payments in three weeks.
If my payment doesn’t arrive in the next three weeks, how can I be sure it wasn’t sent somewhere else?
The bill states you will get a paper notice in the mail no later than a few weeks after your payment was disbursed. The notice will include information about the form of your payment and where it was sent. At that point if you can’t locate the payment, contact the IRS using the information on the paper notice.
If I haven’t filed tax returns recently, will that affect my ability to receive a payment?
It’s possible. However, you are encouraged to file a return immediately, at least for 2018. “Those without 2018 tax filings on record could potentially affect mailings of stimulus checks,” the IRS website says.
If you owe taxes and you cannot pay, the IRS recommends getting advice from a tax professional, like the tax attorneys at J David Tax Law, who can help request an alternative payment plan or some other tax resolution.
If you owe taxes and you cannot pay, the IRS recommends getting advice from a tax professional, like the tax attorneys at J David Tax Law, who can help request an alternative payment plan or some other tax resolution.
Will most people receiving Social Security retirement and disability payments each month get a stimulus payment?
Yes.
Will eligible unemployed people get stimulus payments? What about Veterans?
Yes and yes.
Will U.S. citizens living abroad receive payments?
Yes, as long as they have a Social Security number and meet the income requirements set forth by the bill.
Will I owe income taxes on the amount of my payment?
No.
If my income tax refunds are being garnished due to student loan default, does this payment get garnished as well?
No. And for more good news, the bill actually temporarily suspends nearly all efforts to garnish tax refunds that are used to repay debts, including IRS debts. If you are behind on child support, the waiver may not apply to you.
Charitable Contribution FAQs
Does the bill do anything about charitable donations used to help people impacted by the pandemic?
Yes — and not just for 2020 – but only for people who don’t itemize their deductions. The bill allows for a new deduction up to $300 in annual charitable contributions. You calculate this new deduction by subtracting the amount given from your gross income.
To qualify for this deduction, cash must be given to a qualified charity and not to donor-advised funds. These are charitable account that affluent people use to bunch contributions in a particular year so they can maximize their deductions. Donations made since Jan. 1 count towards the $300 cap.
Retirement Account FAQs
Are any of the retirement account rules suspended?
For the calendar year 2020, taxpayers will not have to take a required minimum distribution from their individual retirement accounts or workplace retirement savings plans, like a 401(k). This keeps taxpayers from being forced to sell investments that may have fallen in value, which would lock in their losses. If you don’t need the money now, you can let the investments sit, in hopes that they will recover. Old-fashioned pensions would not be affected.
What happens if I need an early withdrawal from my IRA or workplace retirement plan?
The bill allows you to withdraw up to $100,000 this year without a 10 percent penalty, provided the withdrawal is a result of the outbreak.
Any income taxes that you owe can also be spread out over three years from the date you take the distribution. The money can be put back into the account before those three years are up, despite the fact that the rules would normally keep you from contributions of that size.
The exception only applies to coronavirus-related withdrawals. You qualify for this exception if you, a spouse or dependent tested positive, or if you experienced a variety of negative economic consequences related to the COVID-19 pandemic. Employers are able to let workers self-certify they are qualified to withdraw money from their workplace retirement account.
Can I continue to borrow from my 401(k) or other workplace retirement plans?
Yes, and you are now able to take out twice the amount you can usually take. For 180 days following the passing of the bill, following certification you’ve been affected by the COVID-19 pandemic, you can take out a loan up to $100,000. Under normal circumstances, you could not take out more than half your balance, but the bill suspends the rule.
If you have a loan and were scheduled to repaying the load before Dec. 31, you get an extra year.
Other FAQs About the Bill
How does the aid work for small businesses and nonprofits?
There is good news for small businesses and nonprofits, as some could be eligible for forgivable loans. Our colleague, Emily Flitter, covered the details in a separate article. More details are also offered from the aides to Senator Marco Rubio, Republican of Florida, who wrote a one-page summary of the provisions.
Will it damage my credit report if I take advantage of virus-related payment relief, including the student loan suspension?
No. At least it shouldn’t.
Beginning Jan. 31 and continuing for 120 days after the end of the national emergency declaration, lenders and others are supposed to mark your credit file as current, even when you take advantage of payment modifications.
If your file had black marks before the COVID-19 virus hit, those marks will remain unless the issues are fixed during the emergency period.
Since credit reporting agencies can make errors, be sure to check your credit report a few times during the year. This is even more important if you accept help from your financial institution or a biller this year.
How J David Tax Law Can Help
The tax attorneys at J David Tax Law can help with any outstanding tax debt and unfiled tax returns. Due to the multi-trillion-dollar Stimulus Package, the IRS is in the greatest need of tax revenue than any other time in history. Due to this our tax attorneys have been able to settle tax amounts for the lowest dollars in the firm’s history. Our experts can also work closely with the IRS to determine your eligibility for other kinds of tax relief programs.
