Stimulus Payments Under the CARES Act
Barry Weller
by Barry L Weller, EA
On March 27, 2020, President Trump signed the “Coronavirus Aid, Relief, Economic Security (CARES) Act. One provision of this act is to provide lump-sum checks to many Americans. These lump-sum stimulus payments are “fully refundable tax credits” for tax year 2020. They are nontaxable and will not affect your refund when you file your 2020 income tax return in 2021.
Most residents of the United who have Social Security numbers and an adjusted gross income of $75,000 or less will receive a stimulus payment of $1,200. Married couples earning $150,000 or less, with no children, will receive a total of $2,400. These adults will also receive an additional $500 for qualifying children 16 years old or younger. For tax filers with income above those amounts, the eligible payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 ($198,000 for couples filing jointly) and with no children are not eligible.
The stimulus payment amount is based on your adjusted gross income, which you can find on line 8b of your 2019 federal tax return form 1040. If you haven’t filed your 2019 tax return yet, you can use your 2018 tax return or a 2019 Social Security statement. If you haven’t filed taxes in 2018 or 2019, it could affect your stimulus payment.
If you receive a stimulus payment and your AGI in 2020 exceeds the income thresholds listed above, you do not have to pay the stimulus payment back. No one will end up owing the IRS extra money next year because of the stimulus check they get now.
If you don’t qualify for a partial or full stimulus payment based on your 2018 or 2019 tax return, and your income drops in 2020, you will get the amount of the credit when your file your 2020 tax return in early 2021.
Stimulus payments are expected to be issued before the end of April. If the IRS has your bank information (from your last filed tax return or from the direct deposit account for your Social Security benefits), they will transfer the funds based on the income tax figures they already have via direct deposit. You will get a paper notice in the mail after the IRS disburses your payment, telling you where the payment went and what form it took.
Everyone with a Social Security number and qualifying income level is eligible to receive a stimulus payment. Recipients include veterans, unemployed workers, those on Social Security retirement or disability pay, and individuals currently working.
Barry L Weller, EA is the president of Barry Weller & Associates, Inc. with offices at 19 N Reading Ave, Boyertown, PA 19512 Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS. (updated 4/7/2020)