- Millions of individuals or couples will receive one-time payments of $1,200 or $2,400, respectively, based on new efforts by lawmakers to prop up the ailing economy.
- Plans for how and when those payments will be delivered are still coming together.
- Here are the answers to your most pressing questions, and the questions the government still has to answer.
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Those government stimulus checks should be on their way soon to millions of Americans.
Many people have still have a lot of questions about them.
Last week, Washington lawmakers approved a $2 trillion relief bill in response to the coronavirus outbreak that includes a payment of $1,200 for single taxpayers with adjusted gross income up to $75,000. The amount of those checks is reduced incrementally for people earning up to $99,000 in income, where they are phased out completely.
Taxpayers who are married and file jointly are eligible for $2,400 for up to $150,000 in income. Those sums are reduced up to $198,000 for couples who file jointly and have no children.
Yet many of the details surrounding these payouts are still being sorted.
Here are the biggest questions that have come up, and the answers we know so far.
Will they use my 2018 or 2019 tax returns?
Your check will be based on your adjusted gross income (line 7 of your 2018 Form 1040 tax return or line 8b for 2019).
If you have filed your 2019 return, that information will be used. If not, the government will use your 2018 filing.
"The vast majority of people do not need to take any action," the IRS stated in March 30 guidance. "The IRS will calculate and automatically send the economic impact payment to those eligible."
If you have not filed either your 2018 or 2019 tax returns, the IRS suggests that you file immediately and include your direct deposit information to expedite your stimulus payment.
What if my situation has changed since my last tax return?
Your income may be substantially different in 2020 than it was back when you filed your last tax return.
That's particularly true if your line of work was hit hard by the coronavirus downturn, which may not be reflected in your past adjusted gross income numbers.
Right now, the answer is that you will still get a stimulus payment. But that may have to wait until you eventually file your 2020 tax return next spring.
"Anything that happens in 2020 that's not reflected in your 2019 or 2018 taxes, you're not going to benefit for that particular thing until you can file your 2020 taxes," said Steve Wamhoff, director for federal tax policy at the Institute on Taxation and Economic Policy, a non-partisan think tank.
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That could change if the Treasury Department decides to alter its guidance.
"My hope is they provide a way for individuals who did not qualify based on previous income but do qualify in 2020 to get their money sooner and not wait until next spring," said Nicole Kaeding, vice president at the National Taxpayers Union Foundation, a non-partisan research and education organization.
That could include some kind of declaration form where you could provide evidence that your 2020 income has dropped, such as an unemployment insurance claim.
"We will have to wait and see if that's an option," Kaeding said.
Will my children be eligible for checks?
The legislation calls for $500 to be sent per eligible dependent.
But the definition of dependent is limited to children under 17, based on the same definition that's used for the child tax credit.
So an elderly relative or other dependent who does not meet that criteria will not receive a check, Wamhoff said.
If you had a child in 2020, you will likely have to wait until you file your tax return for 2020 to receive a $500 check for them. That's unless the Treasury Department comes up with a way for you to update that information.
When will the money arrive?
The Treasury Department has said that the money will be available within three weeks to those individuals who have their direct deposit information on file with the IRS.
Based on data from last year's tax returns, that includes 90 million individuals who had a direct deposit refund, according to Kaeding. Officials also have information on Social Security beneficiaries who have been paid via direct deposit.
Historically, it's taken the Treasury Department six to eight weeks to mail payments, though that process could be shorter this time around, Kaeding said.
The government is working on a web-based portal where individuals who do not have their direct deposit on file with the IRS can provide their banking information.
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The Treasury Department will be developing that portal "in the coming weeks," the IRS said in its recent guidance.
Another unanswered question is how authorities will get information on eligible individuals who do not file tax returns and do not receive a 1099 form from Social Security. That includes those who receive Supplemental Security Income, or SSI, benefits.
"People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment," the IRS has said.
More details on how and when those individuals will need to file those returns is still forthcoming. The IRS plans to make those updates available on its IRS.gov/coronavirus website.
Will there be more stimulus money down the line?
There has already been discussion of more stimulus checks, depending on how long and how severe the economic downturn turns out to be.
Those payments would likely follow the same income threshold and phase out rules, Kaeding said. The amounts of the checks could vary, she said.
Source: cnbc.com