Economic Impact Payments
We wanted to provide some information regarding the Economic Impact Payments that are currently being issued by the Department of the Treasury (IRS). Many of you may have already received payments, and many have not. We will provide some insight into what these payments are, and how the process works.
What is an economic impact payment?
In light of the current pandemic and related effects on taxpayers and the economy, the US government is providing economic assistance to American taxpayers in the form of 2020 refundable tax credits. Instead of requiring eligible recipients to wait until 2021 when they are filing their 2020 tax returns, the Treasury has implemented a program to advance these amounts now.
Who is eligible?
These people should automatically receive their payments:
US Citizens and permanent residents who filed income tax returns for 2018 or 2019 (the IRS will look first at your 2019 tax return, and if you have not filed that yet, they will look for your 2018 return)
Recipients of Social Security retirement, disability (SSDI), or survivor benefits
Recipients of Railroad Retirement Benefits
Individual tax filers with adjusted gross income (AGI) up to $75,000 ($112,500 for HOH filing status) will receive a $1,200 payment. Married couples filing joint returns, with adjusted gross income up to $150,000 will receive a $2,400 payment.
The payment amounts are phased out by $5 for every $100 of AGI above those amounts. So if you make more than the stated amounts you are still eligible for a payment, though it will be less than the full amount.
Individual tax filers with adjusted gross income over $99,000 and joint filers with income over $198,000 do not qualify for any payment.
In addition to the $1,200 amounts, dependent children less than 17 years old qualify for a $500 payment. These $500 payments will be issued to the person(s) who claimed the child on the most recently filed tax return. From the information available so far, the income limits and phaseouts above apply to these payments as well.
How will I get my payment?
Taxpayers who received refunds via direct deposit for their 2018 or 2019 tax returns will receive their stimulus payment by direct deposit into the same bank account. Taxpayers who received refunds via check in 2018 and/or 2019 or who owed additional tax and did not get a refund have the option to go to Get My Payment at the official IRS website and input direct deposit information. You will need a copy of your last filed tax return (either 2018 or 2019) as the IRS will ask for two verification figures from the tax return. Direct deposits are likely to arrive faster than paper checks. At this point, the IRS is not allowing taxpayers to go change direct deposit information they have on file - so if the bank account used to receive tax refunds has been closed, the funds should be returned to the Treasury, which will then issue a paper check.
Social security, SSDI, survivor benefits, and RRB recipients should receive their economic impact payments the same way they receive their monthly benefit payments.They do not need to take any action to apply for the payments.
Eligible US Citizens and permanent residents other than the above should apply to receive their payments by visiting Non-Filers: Enter Payment Info Here on the official IRS website. Examples of this group include individuals who did not file 2018 or 2019 tax returns because their income did not exceed the standard deduction amounts.
What if my payment is for the wrong amount?
If for any reason the government issues a payment less than the taxpayer was eligible for, the taxpayer will receive the difference when their 2020 tax return is filed. For example, if a taxpayer did not claim a dependent child on their 2018 tax return but plans to in 2019 (but has not filed their 2019 return yet), the government likely based the payment amount on the 2018 tax return.
Since the government is basing these advanced payments on 2018 or 2019 information, it is possible that 2020 income will differ from those amounts. If the taxpayer received money based on the 2018 or 2019 information the government used for determining eligibility, but their 2020 income is too high for the amount they received, the IRS will chalk it up to a “math error” on their part and the taxpayer will not have to pay back the difference. If the government did not issue a payment to the taxpayer (or issued a smaller payment than the taxpayer was eligible for based on their 2020 income) the taxpayer will receive the credit on their 2020 tax return.
In some cases, even if a 2019 return has been filed within the past 2 or 3 weeks, the government based the payments on 2018 tax returns because the 2019 returns were not processed in time for them to be used in the determination. In any case, the taxpayer will be eligible for any additional amounts due when they file their 2020 tax return.
Can I check the status of my payment?
You can use the Get My Payment tool at the official IRS website to check the status of your Economic Impact Payment. Follow the instructions on the website.
Other important points
The IRS never contacts taxpayers by phone. If anyone calls saying they are from the government and need personal or banking information to which to send payment, HANG UP IMMEDIATELY.
Be extremely cautious using the Internet to input information for the economic stimulus payments. We recommend that you use the hyperlinks included in this communication, or go to www.irs.gov and use the appropriate links. Do not use a search engine to find where to update your information, as criminals create counterfeit websites to steal personal information, and search engines sometimes provide links to these.
The Get My Payment and Non-Filers: Enter Payment Info Here tools may ask for information from your 2018 or 2019 tax returns. You should be able to locate that information by referencing the appropriate tax return. If you do not have a copy of your tax return, contact the preparer who assisted you. If we prepared your tax return and you need another copy, please email requests to mail@statoncpa.com or call our office at 828-395-1080.
Please share this information with anyone you know that needs it. Those of you who know recipients of Social Security benefits that may not be on our email list, be sure to let them know that they should receive additional payments as outlined above. During this time, it’s important that we all support one another and help out however we can. If you have any questions or information you’d like to share with us, feel free to email us, call us, or connect with us on social media on Facebook, Twitter, or LinkedIn.