UPDATED 3/28/2020
Individual stimulus checks - What you need to know from
Vaughan M. Long, EA
Tax Solutions Alliance
IRS Tax Representation
So with the passage of the CARES Act, the checks are coming but I wanted to outline the amounts, limitations and what you need to do IMMEDIATELY if you want to have a chance to get a COVID-19 check:
Amount of the check going out (depending on the limitations outlined below):
ADULTS (status dependent on your most recent filed 2018 or 2019 tax return)
Single: $1,200
Married Filing Joint: $2,400
Head of Household: $1,200
CHILDREN:
$500 for each child under 17
NOTE: Please do not miss this distinction of the child needing to be under 17 to qualify for the $500.
This is the same age limitation for receiving the full child tax credit on your tax return today.
Example:
If you have a high school senior or college student who is 17 or older as of most recent tax return filed, they would not qualify for you to receive an additional $500 for them.
NOTE 2: If someone is claimed as a dependent on another person's return, then the person being claimed as a dependent does not get a check.
Example:
You as the parent claimed your 20 year old college child on your tax return but your 20 year old college child could have filed their own return that year.
You as the parent will not get the $500 because your 20 year old college child is too old to qualify as your dependent.
However, if your 20 year old college child had filed their own tax return instead of you claiming them as a dependent on your own return, then your college child would have been eligible for the full single amount of $1,200 because they filed their own tax return.
Limitations on how much of the full check you will get:
INCOME THRESHOLDS:
For what is considered "high income taxpayers" in this legislation, you will see a reduced payment based on the following criteria of your AGI (Adjusted Gross Income) as found on your tax return:
Single: AGI of $75,000 in AGI of $99,000
Example: As soon as you pass $75,000 in AGI, your total rebate will begin to reduce and if you earned more then $99,000, then you will NOT RECEIVE A STIMULUS CHECK
Married Filing Joint: AGI of $150,000 to AGI of $198,000
Head of Household: AGI of $112,500 to AGI of $136,500
NOTE: Where do your find your AGI on your 2018 return or 2019 return?
2018 Return: Page 2, Line 7
2019 Return: Page 1, Line 8b
NOTE: Yes, the IRS changed the format of the personal tax return form (1040) from 2018 to 2019 which by the way is different from your 2017 return (AGI was on Page 1, Line 37 in 2017).
I promise I did not make any of that up!
FAQ (Frequently Asked Questions):
Q: Which Return Does the IRS look at to determine any of the information above and whether or not you get a check?
A: First the IRS looks for your 2019 return and if that is not filed then the IRS will go back to your 2018 return.
However, if you have not filed either your 2018 return nor your 2019 return, then YOU DO NOT GET A CHECK!
So in this case, get moving and file your 2019 tax return IMMEDIATELY.
Q: What is the fastest way to get the check?
A: Direct Deposit - if you put your direct deposit information on your 2018 or 2019 tax return, then the IRS will send out the funds via direct deposit.
If you usually get mailed a check, then it is likely to be a while for this check to come.
This would be another reason to file your 2019 return IMMEDIATELY so the IRS would have your current direct deposit information.
Q: What if I made less money in 2019 then 2018 and based on my 2019 I will get more in the check BUT I have not filed my 2019 return yet?
A: Let's answer this one with the following outline:
If you have filed your 2018 return and it is less then the AGI income threshold's listed above, you will get a COVID-19 check even if you have not filed your 2019 return.
If you file your 2019 return, then the AGI (income) figure on the 2019 return will overrule the 2018 AGI (income) figure.
So, per this question, if your 2018 return income is too high to get the check but your 2019 return will show less income and allow you to get a check, then you want to get your 2019 return filed IMMEDIATELY so you can get a check.
Q: What if I have not filed for either 2018 or 2019 because I had no income?
A: Go file your 2019 return IMMEDIATELY and show that you had no income.
Based on what I have read so far, that should allow for a COVID-19 check to go out to you.
Q: What if I do not file any return because the only income I receive is Social Security Income (SSI)?
A: Then you will receive the check since the IRS will see in their system that the only income you have is Social Security.
There is no need in this situation to file a return for 2018 or 2019 in order to receive the check.
Q: I am in trouble right now. I have been laid off in 2020 due to COVID-19, but I made money in 2018 and 2019 that would have exceeded the highest limit per the outline above. Now what do I do?
A: Then I have some bad news in the short term.
There will not be a check coming for you now BUT when you file your 2020 return next year, you will get the COVID-19 amount based on your 2020 income.
This is because technically the check is tied to your 2020 return but since the 2020 return will not be filed for at least a year from now, the IRS will default back to your 2019 return first and then last to your 2018 return.
Sorry to be the bearer of the bad news.
Q: Is this check going to be considered taxable income to me on my 2020 tax return?
A: No.
See, one of the few times I did not write a whole lot.
But I am running out of steam and have a few questions more to hit so let's keep going.
Q: What if my income is higher on my future 2020 return then my returns for 2018 and 2019? Do I have to give this money back?
A: No.
All right, that is 2 questions in a row with short answers.
For those of you that know me, that has got to be a record.
Q: What if I owe the IRS on back taxes? Do they keep the check?
No, the check will not be taken to repay back IRS taxes.
That is 3 in a row.
Q: Is this a one time check or will there be more?
A: This is a one time check and there would need to be new legislation to authorize more checks.
That is 4....let's keep this up.
Q: Ummm....earlier, you said Direct Deposit was the fastest way to get the check BUT.....you did not say when can we expect to get the check.
A: This one is not so easy to answer so I will have to break my 4 question streak.
The last time this was done, it took about 8 weeks for everyone to get their checks once they started going out in the mail.
That was due to how the checks were grouped for mailing by the Treasury.
There was an initial estimate of the first payments going out by April 6, 2020 (likely via direct deposit); however, there has been follow up comments since then clarifying that checks may not begin going out until later on in April.
So let's say that checks start mailing out May 1, 2020.
Based on the past, that would mean some people would not see these checks until the end of June, 2020.
For more information on how Vaughan and his team can help you reach out to Vaughan at vlong@taxtsa.com
Feel free to reach out to Paula, Molly, or me with any questions. Also continue to follow EDGe on social media and on our EDGe blog for updates on other small business assistance measures.
Eric Glymph
Financial Strategist / Founder
EDGe Business Planning
www.EDGeBusinessPlanning.com
804-833-1792