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KSM Blog | Katz, Sapper & Miller CPA

Coronavirus Stimulus Payments: Frequently Asked Questions

Posted 7:30 PM by

As a part of the recent passage of the CARES Act, individuals will receive individual rebate checks (sometimes called stimulus payments or rebate payments). KSM has compiled a list of frequently asked questions in order to help explain some of the nuances related to these payments.

 

What Are the Basic Eligibility Guidelines? 

Tax filers with an adjusted gross income of up to $75,000 for individuals/married filing separate, $112,500 for head of household filers, and $150,000 for married couples filing joint returns will receive $1,200 per person (or $2,400 for married filing joint). For filers with income over those amounts, the payment is reduced by $5 for each $100 above the $75,000/$112,500/$150,000 thresholds (which would be up to $99,000 for single/married filing separate filers, $136,500 for head of household, and $198,000 for married filing joint).

Social Security recipients, railroad retirees, and disability or veteran’s benefits recipients who are otherwise not required to file a tax return are also eligible and will not be required to file a tax return. 

Additionally, in order to receive the payment, the individual must be a U.S. citizen or resident alien who has a valid Social Security number and cannot be claimed as a dependent of another taxpayer. The IRS will determine eligibility by looking at either the 2019 or 2018 tax returns. 

When Will I Receive My Stimulus Payment?

The direct deposits started going out on Friday, April 10. Paper checks will start going out near the end of the week and it could take into September to get them all issued.

What If My Address Has Changed? 

If you are getting a direct deposit (i.e., you provided your direct deposit information on a 2018 or 2019 tax return or your Social Security income, railroad retiree income, or disability or veteran’s benefits is direct deposited), your address doesn’t matter. The IRS will direct deposit into the listed account. If you have not provided your direct deposit information, a paper check will be mailed to the address that they have on file. 

If you would like to provide your direct deposit information or new address information, file your tax return as quickly as possible reflecting the new address or complete Form 8822 – Change of Address. 

What If My Bank Account Information Has Changed for the Direct Deposit?

If you need to update your bank account information for your direct deposit, the only mechanism to do that currently is to file your 2019 tax return with updated information. The IRS is going to have a “Get My Payment” portal which should be live by the middle of April (see question below) that will allow you to notify them of your direct deposit information. If the IRS has already sent the direct deposit, you will need to work with your bank directly. 

What If I’m Eligible for a Stimulus Payment but Haven’t Filed a Tax Return?

The IRS encourages anyone that has a tax filing obligation for 2018 or 2019 to file as soon as possible in order to receive an economic impact payment. If you did not need to file a tax return, you can use the non-filers portal on the IRS website located at:  https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

Can I Track My Payment? 

The IRS has created a “Get My Payment” portal. This portal should allow you to check your payment status, confirm your payment type (direct deposit or check), and enter your banking information. The portal can be accessed via this link: https://www.irs.gov/coronavirus/economic-impact-payments

Will My Child Receive a Stimulus Payment? 

The rules for getting a stimulus payment are that you must be a U.S. citizen or resident alien, have a valid Social Security number, be under the listed income thresholds, and are not claimed as a dependent of another person. However, the legislation explicitly states that if a dependency deduction under Internal Revenue Code Section 151 is allowable to another taxpayer, they will not receive a stimulus payment (because they will be considered a dependent). It is unclear how the IRS plans to check or administer this provision. 

Will I Get the Extra $500 for My Child? 

In order for a child to qualify for the additional $500 credit, they must: 

  • Be related to you by blood, marriage, or adoption
  • Be under the age of 17
  • You must provide more than half of their financial support during the year
  • They must live with you for at least half the year
  • They must be a U.S. citizen, U.S. national, or U.S. resident alien
  • They must have a valid Social Security Number

If those requirements are met, the additional $500 credit will be sent to the taxpayer that claimed the child as a dependent on their most recent tax return. 

Will I Have to Pick the Stimulus Payment up as Income on My 2020 Tax Return? 

Although the stimulus payment will be recalculated based on your 2020 tax return, there will be no income inclusion. 

If the Stimulus Payment Is Re-Determined Based on My 2020 Tax Return, Will I Have to Pay Any Excess Back?

The credit will be re-determined based on your financial position in 2020 and will provide an additional credit against 2020 tax if you were not paid enough (i.e., you were phased out based on the 2019 or 2018 tax return information that was available to them or you had more dependents). There is no mechanism built into the law to require a taxpayer to pay back any amounts received that they weren’t eligible for in 2020 (i.e., income was too high or children turned 17).

What If I Alternate Claiming the Child as a Dependent With My Ex-Spouse? 

The spouse who has the ability to claim a dependency deduction for the child for the 2020 tax year should get the $500 child credit. However, the IRS is using the 2018 and 2019 tax returns to determine that amount. There is a scenario where the 2018 return is used for one parent (because they haven’t filed their 2019 return), the 2019 return is used for the other parent, and both parents receive the $500 credit. As stated in the previous question, there is no current mechanism to pay back any excess credit received. It is unclear how the IRS plans to check or administer this provision. 

For additional questions, please reach out to your KSM advisor or complete this form.

VISIT THE KSM COVID-19 RESOURCE CENTER

About Katz, Sapper & Miller
KSM is a nationally recognized consulting, tax, and audit firm. Through our deep experience across multiple disciplines and industries, we leverage emerging technologies, combined with our people’s differing perspectives, ingenuity, and creativity, to help our clients solve their most difficult challenges.

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