02 Apr Stimulus Checks: 10 Things to Know
The massive stimulus package that was passed by Congress last week provides for direct payments to households. These economic impact payments – frequently referred to as stimulus checks – are sure to welcomed by the many people who have been adversely impacted by the efforts to contain the Coronavirus.
As with any new government program, there are many questions about how the program will operate as well as a fair amount of misinformation floating around. To help you make sense of things, we have put together a summary of answers to some of the most common answers that we’ve heard so far.
Will everyone receive the stimulus payments?
No – payments are limited to eligible individuals and have limitations, although it’s estimated that 9 out of 10 households will be eligible.
The biggest limitation on who will receive the stimulus payments is based on income. For single filers, payments are reduced above $75,000 of adjusted gross income (AGI). For married couples filing jointly, the phaseout begins at $150,000.
Those people who had AGI below these thresholds, and aren’t otherwise ineligible, will receive the full amount. Those above the threshold may receive a reduced amount (see below).
Who in ineligible to receive a payment?
The stimulus package defines eligible individuals to specifically exclude non-resident aliens and those who are claimed as a dependent on someone else’s tax return. Trusts and estates are also ineligible to receive a payment.
What size of a stimulus check will I receive?
For those eligible, the stimulus checks will be up to $1,200 for individuals and $2,400 for married couples. In addition, households will receive up to $500 for each qualifying child.
These amounts will be reduced by $5 for every $100 of adjusted gross income (AGI) over the thresholds mentioned above.
For example, married couple with two qualifying children and AGI of $100,000 can expect to receive a stimulus check of $3,400. If the same couple had AGI of $160,000 their anticipated payment would be $2,900 ($2,400 + $500 + $500 – [($10,000/100) x $5]).
For those who are less comfortable with the math, there are a number of online calculators to help you!
What exactly is a qualifying child?
The term “qualifying child” actually has a relatively complex technical definition. In simple terms, a child claimed as a dependent who has not yet reached age 17 will almost always be a qualifying child.
Is there a minimum amount of income I have to earn to qualify to receive a stimulus check?
No! Although the payments are phased out for higher income individuals/households, those with little or even no income should receive the full amount.
What do I need to do to get my payment?
For most people, there is no action required to receive the economic impact payments. The IRS will be automatically calculating and sending payments to those who are eligible
Do I need to file a tax return to get my payment?
Maybe. The calculation of the payment you receive will be based on your 2019 tax return (or your 2018 return if you have yet to file for 2019). However, the Treasury Department has clarified that individuals receiving Social Security benefits, and are not otherwise required to complete tax returns, will not be required to do so.
Those individuals not receiving Social Security benefits, and that did not file a tax return for 2018 or 2019, should do so. There are a number of resources available to provide tax preparation assistance for free for low-income individuals.
When will I receive my payment?
The Treasury Department and Internal Revenue Service (IRS) have announced on March 30th that the distribution of payments will begin in the next three weeks, but no exact date has yet been provided.
To ensure you have access to your payment as soon as possible, it is recommended that you utilize direct deposit.
How can I receive my payment via direct deposit?
If you provided your banking information on your 2019 tax return (or your 2018 return if you have yet to file for 2019), your payment will automatically be sent based on the detail provided.
If you did not provide your bank information on your return (or did not file a return in 2018 or 2019), the Treasury is planning to provide a website in the coming weeks where you can provide this detail.
What about deals I’ve heard about to increase my payment or receive my payment faster?
You should be extremely cautious of any offers purporting to increase or accelerate your benefit, even if the offer claims to be from a legitimate government entity. Unfortunately, it’s common during a crisis to see an increase in fraud. If something seems too good to be true, it probably is.
When in doubt, talk to a trusted financial professional. Never provide your bank account information to someone you don’t know, even if they claim to be from the IRS or other government agency.
This information has been collected from a number of sources that we believe to be reputable, including the IRS. However, we strongly advise that you reach out to a trusted financial professional regarding your individual situation.