Atlanta Financial Blog

Common FAQs On Tax Stimulus Checks

Common FAQs On Tax Stimulus Checks

AFA Marketing
March 30, 2020

When will I get my check? Checks are supposed to be produced “as rapidly as possible.” Mnuchin has hinted they will come in April, but it’s been suggested that could take up to two months. One thing that is true: if you use direct deposit, you’ll get your money faster.

Wait, how does a phaseout work? Phaseout means that the benefit goes down as income goes up. In this case, for every $100 of income above those thresholds, your check will drop by $5. So, if you are a single filer earning $75,100, your check will be $1,195 ($1,200-$5). If you are a single filer earning $85,000, your check will be $700 ($1,200-$500). If you do the quick math on that, it means that you’ll phaseout completely (meaning that you’ll get nothing) once you hit $99,000 as a single filer, $198,000 as a married couple filing jointly, or $136,500 for heads of household.

What about limits on kids? There are no limits on the number of children that qualify. The definition of child will be the same as for the child tax credit.

Will I need a Social Security Number to get a check? Yes. Or in the alternative, an adoption taxpayer identification number. Ditto for spouses and kids.

So how does this work? Do I need to file anything to get my check?  Technically, the checks are advances of refundable credits. Treasury will advance your check based on your most recently filed tax return (2018 or 2019 tax return). If you haven’t filed a tax return, the bill allows Treasury to use the information on your 2019 Form SSA-1099, Social Security Benefit Statement, Form RRB-1099, Social Security Equivalent Benefit Statement.

Okay, I don’t understand. What is a refundable tax credit? A refundable credit means that you can take advantage of the credit even if you do not owe any tax. Unlike with a nonrefundable credit, if you don’t have any tax liability, the “extra” credit is not lost but is instead refunded to you.

In this case, the stimulus check acts like a refund that you get in advance based on your 2020 income. That’s confusing because you don’t know how much you’re going to earn in 2020, but it’s why the IRS is using earlier returns. But this advance payment on the credit does not affect your “normal” tax refund for 2020: you won’t lose out on your expected tax refund for 2020 with the check.

What if I don’t get the right amount? When you file your 2020 tax return, the IRS should compare numbers. If you should have gotten a check and didn’t, or if you should have gotten more than you did because the IRS didn’t know something important (like you have a kid), you should get more money. If the numbers on your 2020 tax return suggest that you got more than you should because of your income, you should not have to pay it back. Don’t worry: most taxpayers should get just the right amount.

Is my check taxable? No. This is not taxable income.

What if I am expecting a refund for the 2019 tax year? Your 2019 refund will not be affected by the stimulus check.

What if I’ve moved? Under the law, the Treasury must send notice of the payment by mail to your last known address. The notice will include how the payment was made and the amount of the payment. The notice will also include a phone number for the appropriate point of contact at the Internal Revenue Service (IRS) if you didn’t receive the payment. You can help make sure that it goes to the right place by updating your address after a move. Usually, you’d do that on your tax return, but you can also submit a federal form 8822, Change of Address (downloads as a PDF). It generally takes four to six weeks to process a change of address.

What about retired folks? Retired seniors are eligible so long as they meet the other criteria (Social Security numbers, income thresholds, etc.). If you depend on Social Security but normally don’t file a tax return, you do not need to file a tax return to get the check. The bill directs the Treasury to rely on your SSA-1099 form (or RRB equivalent) to figure and send your check.

What about those on government benefits? And those with no income? Yes, eligible folks include those with no income, as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as SSI benefits. I’ve seen a lot of confusion about this: it’s because one of the original proposals limited the checks to those who earned income. This is no longer the case.

Will I still get the check if I owe the IRS some money? Yes. If your refund would normally be seized to pay a tax debt, that shouldn’t happen here. Shouldn’t. Assuming it works as planned.

 

Forbes, March 25, 2020: “All You Wanted To Know About Those Tax Stimulus Checks But Were Afraid To Ask”

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