The CARES Act was signed into law on March 27, 2020 and approved stimulus payments to individuals to assist with the impact of the COVID-19 pandemic. The IRS issued a news release to provide additional guidance, and created an information center on its website to furnish further updates as they develop. Every U.S. resident is potentially entitled to a payment, however there are some limitations, and the mechanics of receiving your check is a work in progress. Here are five things to know about your stimulus check:
- The preliminary amount of your check will depend on your filing status, and the number of qualifying children you have. Each person that is not a dependent of someone else is eligible to receive a check of $1,200 (so married couples are entitled to $2,400), subject to the income limitations discussed below. In addition, the stimulus payment is increased by $500 for each qualifying child.
- The amount of your check may be reduced depending on your income. Individuals will receive a full payment if their income is under $75,000 and married couples filing joint returns will receive a full payment if their income is under $150,000. “Income” for the purpose of the stimulus check means adjusted gross income from your tax return. The payment is reduced by $5 for each $100 you are above the threshold, and is completely phased out if income reaches $99,000 for individuals and $198,000 for joint filers (with no children).
- The determination of your filing status, income, and number of qualified children is based on your 2019 tax return, if filed, otherwise, your 2018 tax return. You should be careful to review whether any of these inputs will change from 2018 to 2019. For example, if you are entitled to a bigger stimulus check based on your 2018 return, you may want to wait to file your 2019 return. At this time, there is no indication that the amount of your stimulus payment will have to be repaid (for example if you would be entitled to a smaller check based on your 2019 returns). However, if you are entitled to a larger check based on your 2020 tax return, you will receive the additional amount when you file your 2020 return.
- Your payment will come automatically by direct deposit to your account on file with the IRS. This may be the account that you used most recently to receive a direct deposit of a refund or to make an electronic tax payment. If you do not have a bank account on file, the IRS is planning to develop a web-based portal so that you can provide your bank information. Otherwise, your check will be mailed to the address on file with the IRS.
- There is some uncertainty as to when the payments will come, but some are optimistic they may come as soon as next week. You should monitor your bank account to see if the payment is deposited, but should allow for some time for the IRS to process all of the payments. The IRS will follow up with a notice to your last address to confirm that the payment has been made, and will provide further details on how to report a missing payment. You should be careful of scams asking for your social security number or bank information – the IRS will not call, text, email, or contact you via social media.
The check is not considered income to you and you can spend it on whatever you choose. It can be a good way to pay for necessities, to help with bills, or to support local businesses that are trying to stay afloat. Just make sure that you are spending that money while you are staying at home! We’re all in this together… stay safe!
If you have questions about estate planning, probate, trusts, and tax matters, please contact one of Conn Kavanaugh’s experienced estate planning lawyers.
Click here to subscribe to the blog and never miss an update!Share with your network: