Millions of Americans will receive direct cash payments from the government to help lessen the impact of the COVID-19 crisis. The Coronavirus Aid, Relief and Economic Security Act (CARES Act) is an emergency economic recovery package includes funding for individuals and small businesses. The IRS says distribution of economic impact payments will begin in the next three weeks and will be distributed automatically. Many people have questions about how the new law impacts their families and businesses. Here’s some answers:
How much of a rebate will I receive?
Individuals with a Social Security Number (SSN) and who are not dependents may receive $1,200 (single filers and heads of household) or $2,400 (joint filers), with an additional rebate of $500 per qualifying child, if they have adjusted gross income (AGI) under $75,000 (single), $150,000 (joint), or $112,500 (heads of household) using 2019 tax return information. (The IRS will use 2018 tax return information if the taxpayer has not yet filed for 2019.) If your income is higher, your payment will be reduced by $5 for each $100 above the income thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible for payments under the CARES Act.
How do I get my rebate?
For most Americans, no action is required. The IRS will use data from the most current tax returns or Social Security data to provide a rebate to Americans either via direct deposit (if such information is available) or through a paper check in the mail to the last address on file.
U.S. Treasury Secretary, Steven Mnuchin, said he hopes to distribute rebates to taxpayers who e-filed with direct deposit banking information in three weeks. Taxpayers receiving rebate checks may have to wait six to eight weeks to receive a paper check in the mail.
Treasury is developing a web-based portal for individuals to provide their banking information to the IRS online. Taxpayers will be able to receive payments immediately as opposed to checks in the mail. More information on this site will be available as it is ready.
What should I do if I did not file a tax return for 2019 or 2018?
The best way to ensure you receive a recovery rebate is to file a 2019 tax return if you have not already done so. This could be accomplished for free online from home using the IRS Free file program (https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free).
What if I don't normally file a tax return?
If you receive veterans disability compensation, a pension, or survivor benefits from the Department of Veterans Affairs, or your income level does not require you to file a tax return, then you need to submit information to the IRS to receive an Economic Impact Payment.
Eligible U.S. citizens or permanent residents who:
- Had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019
- Were not otherwise required to file a federal income tax return for 2019, and didn't plan to
You can provide the necessary information to the IRS easily and quickly for no fee through Non-Filers: Enter Payment Info. https://www.freefilefillableforms.com/#/fd/EconomicImpactPayment
The IRS will use this information to determine your eligibility and payment amount and send you an Economic Impact Payment. After providing this information you won’t need to take any additional action.
What if my income was above the threshold in 2019, but I’ve lost my job due to the corona virus? Can I still get a rebate check?
The rebate is actually an advance on a tax credit that you may claim on your 2020 tax return. If your income is lower in 2020 than in 2019, any additional credit you are eligible for will be refunded or reduce your tax liability when you file your 2020 tax return next year.
If I have a past due debt to a federal or state agency, or owe back taxes, will my rebate be reduced?
No, the bill turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support payments that the states have reported to the Treasury Department.
Watch for scams
“The IRS will NOT contact you to ask you to pay a fee or confirm personal information—IT IS A SCAM,” the IRS shared on its Facebook page March 28.
The U.S. Department of the Treasury has also warned to watch for scams during this time.
“If you receive calls, emails or other communications claiming to be from the Treasury Department and offering COVID-19 related grants or stimulus payments in exchange for personal financial information, or an advance fee or charge of any kind, including the purchase of gift cards, please do not respond. These are scams.”