Stimulus Checks will be issued soon, and our office has received several calls concerning the when, how and why. Here is what you need to know:
- The stimulus payment is a 2020 credit that will be reconciled on the tax return filed in 2021 for the 2020 tax year – IT’S NOT TO BE PAID BACK! 🙂 IT’S FREE MONEY!
- It is a maximum of $1200 for singles, $2400 for married taxpayers and then $500 for each child
- The payment phases out for Singles earning more than 75K, Married earning more than 150K and those filing Head of Household earning more than $112,500
- The payments are being sent in advance based on the return filed for 2019
- If the 2019 return has not been filed, it will be based on the 2018 return
- If neither the 2018 nor the 2019 return has been filed, you will want to file soon
- If you do not get all the stimulus, you may receive it when you file the 2020 tax year return in 2021
- Currently, the IRS is requiring all individuals to file a return to receive the stimulus, yet the law that was passed does not require that. The IRS has announced a special return for those that do not regularly file. Details are forthcoming
- If you have provided a direct deposit account on your 2018 or 2019 return, the payment will go to that account.
- The IRS will provide a database and web site that will allow you to change the account identification number if necessary.
- The IRS has provided a web page with FAQs: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
There is considerable confusion over these rules and an unnecessary rush to file 2019 returns when the 2018 return is sufficient. If you have not filed in 2019 and show more than the allowed income on the 2018 return, that would be a reason to file sooner provided the 2019 return income is eligible for the payment. If both returns show disqualifying income, you still have another chance when you file for 2020.
For a YouVideo explanation see: https://youtu.be/9lr-7oGdhGk