As COVID-19 continues to run rampant in the United States, individuals everywhere are experiencing emotional, physical and economical implications. In an effort to ease the pandemic’s detrimental effects, the federal government has recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The Rundown on Stimulus Checks: Your Questions Answered
As part of the CARES Act, taxpayers who qualify will receive a direct deposit of up to $1,200, and couples will receive $2,400. In addition, families will receive $500 per child under the age of 17. The payment will begin to phase out for individuals with a 2018 or 2019 adjusted gross income of $75,000, couples with a $150,000 income, and single parents with a $112,500 income.
Important to note is that the initial amount paid will be based on either a taxpayer’s 2018 or 2019 income tax return (whichever is the latest return that the IRS has on file), but it will ultimately be ‘trued up’ if a taxpayer is owed money based on their actual 2020 income. In other words, taxpayers will be given an estimated amount based on their 2018/2019 incomes, but could end up getting even more (albeit later) if their 2020 return shows they made less money than they made in the previous two years.
How Does the Phase-Out Work?
Individuals who make under $75,000 and couples who make under $150,000 are eligible for the full stimulus check. For taxpayers with higher income, the amount is reduced by $5 for each $100 above $75,000, or $150,000 for couples - up to $99,000 or $198,000. This means that individuals with an income higher than $99,000 are not eligible to receive a stimulus check and neither are joint filers with an income over $198,000.
How Will I Receive My Payment?
The IRS will use information from 2019 tax returns to calculate your payment amount and will send the payment to the bank account listed on the return. For taxpayers who have not yet filed their 2019 return, the payment will be based on their 2018 return and will be deposited to the account on file from the 2018 return.
What if the IRS Does Not Have My Direct Deposit Information?
The U.S. Department of Treasury is planning to create an online portal where individuals can update their bank information in order to receive a quicker direct deposit, rather than a mailed check.
If I Usually Do Not File a Tax Return, How Can I Receive a Check?
Those who usually do not file a tax return, including low-income taxpayers, senior citizens and Social Security recipients, will need to file a simple tax return (but still will not owe tax) in order to receive their check.
Is the Stimulus Check Taxable?
Since the stimulus check is a tax credit, it is not income and therefore is not taxable.