Category: Timely Opportunities
You've probably heard that IRS will be making millions of ''economic impact payments'' (also called ''recovery rebates'') in the coming months to individuals to help people stay afloat during this time of economic uncertainty related to the COVID-19 crisis. Here's what you need to know about this program.
Amount of payment. IRS has started to send payments of up to $1,200 to eligible taxpayers or up to $2,400 to married couples filing joint returns. Parents will get an additional $500 for each dependent child under age 17. Thus, the payment for a married couple with two children under 17 will be $3,400.
Who is eligible. U.S. citizens and residents are eligible for a full payment if their adjusted gross income (AGI) is under $75,000 (singles or marrieds filing separately), $122,500 (heads of household), and $150,000 (joint filers). The individual must not be the dependent of another taxpayer and must have a social security number that authorizes employment in the U.S.
Phaseout based on income. For individuals whose AGI exceeds the above thresholds, the payment amount is phased out at the rate of $5 for each $100 of income. Thus, the payment is completely phased out for single filers with AGI over $99,000 and for joint filers with no children with AGI over$198,000. For a married couple with two children, the payment will be completely phased out if their AGI exceeds $218,000.
How to get a payment. The vast majority of people won't have to do anything in order to get an economic impact payment. IRS will calculate and send the payment automatically to those who are eligible. If you've already filed your 2019 tax return, IRS will use the AGI and dependents from that return to calculate the payment amount. If you haven't filed for 2019 yet, information from your 2018 return will be used.
IRS will deposit the payment directly into the bank account reflected on the tax return. If you do not have a bank account on file with IRS, visit IRS.gov and look for Filers: Get Your Payment to provide your bank account information. Otherwise a paper check will be mailed. Social security recipients who are not otherwise required to file a tax return will receive the payment directly to their bank account on record with the IRS. If a tax return is not required to be filed, individuals should visit IRS.gov and look for information for Non-Filers: Enter Payment Info Here.
People who don’t receive these payments in 2020 may still get them as tax credits when they file their 2020 tax returns, provided they qualify at that time.
For security reasons, the IRS plans to mail a letter about the economic impact payment to the taxpayer’s last known address within 15 days after the payment is paid. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If a taxpayer is unsure they’re receiving a legitimate letter, the IRS urges taxpayers to visit IRS.gov first to protect against scam artists.
When will payments be sent. IRS anticipates that taxpayers who have bank account information on file will receive direct deposit payments by the end of April. IRS expects to mail checks beginning in early May and continuing over 20 weeks. Checks will be issued in reverse order based on the taxpayers adjusted gross income (AGI) with the lowest AGI filers first.
Payments nontaxable. Economic impact payments will be reported on the recipient's 2020 income tax return but will not be included in income for tax purposes.
IRS warns of scams. IRS asks taxpayers to be aware of the possibility of scams involving economic impact payments. IRS is not going to call, email or use social media to contact taxpayers to verify financial information or eligibility.
Please let your Kerkering Barberio Team Member know if you have any questions about the economic impact payments or any other COVID-19 issues.
This article was written April 15, 2020. Information is current as of that date. Please check our website periodically for changes.
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