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COVID-19 Impact

Coronavirus Stimulus Package: What You Need to Know

Jo Willetts, EA Director, Tax Resources Published On April 01, 2020


Updated on September 1, 2020

As the federal government manages its on-going and rapidly evolving response to the coronavirus epidemic, a variety of solutions including extending the federal tax deadline for filing and payments, implementing paid leave for some workers and tax credits for small businesses, and a $2 trillion stimulus plan to bolster the U.S. economy were implemented. As a part of the recently passed CARES Act, qualifying taxpayers should receive a stimulus check in the near future.

While information is changing rapidly, we’re answering some frequently asked questions about stimulus payments:

What are the requirements to get the stimulus payments?

An individual must:

  • Have a valid Social Security Number – this is a social security number issued to U.S. citizens and resident aliens with an appropriate visa allowing them to work in the U.S.
  • May not be a dependent of another taxpayer, no matter their age
  • Must have an adjusted gross income (AGI) of less than the phase out amounts:
    • Single with no eligible children $99,000
    • Head of Household with no eligible children $136,500
    • Married Filing Jointly with no eligible children $198,000

Add $10,000 to the phase out amount for each dependent child under age 17 (eligible child)

How much money could I get from the stimulus?

Based on the legislation, the amount an individual will receive is based on adjusted gross income, filing status, and number of children that qualify for the child tax credit. As outlined, single taxpayers with an AGI of or less $75,000 or $112,500 or less if filing as the Head of Household on their most recent tax return should be eligible for $1,200. These taxpayers are also eligible for an additional $500 for each dependent child under 17. Taxpayers who are married filing jointly and have an AGI of $150,000 or less should be eligible for $2,400 and an additional $500 for each dependent child under age 17.

The exact amount a specific taxpayer will receive is determined by the IRS. Use our Stimulus Calculator to see how much you may get.

Taxpayers with an AGI above these thresholds may also be eligible for stimulus funds under a “phase-out” calculation method. However, these calculations are more complex and are more dependent on individual circumstances. The phase-out is based on a taxpayer’s AGI, filing status, and number of children that qualify for the child tax credit. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible. Income such as wages, interest, self-employment income, pension income is all reported on the tax return and is part of the Adjusted Gross Income (AGI).

I received a stimulus check. Do I need to pay taxes on it?

Economic impact payments (EIP) – commonly referred to as stimulus payments – were issued to most taxpayers by the IRS starting in April 2020. These payments are not taxable and should not be reported as income. IRS Notice 1444 identifies the amount of the payment you were issued and the method by which that payment was made. The notice was sent to your last address on file in IRS records within 15 days of payment issuance.

Will I still get a stimulus payment if my only income is Social Security or Railroad Retirement Benefits?

The IRS will be working directly with the Social Security Administration and the Railroad Retirement Board to send the stimulus checks directly to individuals who receive benefits. These taxpayers do not have to file a tax return unless they are married to an individual who does not receive benefits and is not otherwise required to file or if they have dependent children under age 17. If they meet these exceptions, they should file a zero income return so the IRS knows about the spouse and/or eligible children and they can send a stimulus check for these individuals.

See the Home page of irs.gov and click on “Non-Filers: Enter Payment Info Here” to complete the zero income return.

Here are a few filing scenarios and answers as examples:

Example 1: If a taxpayer is married filing jointly, has 3 eligible children and all have a SSN but one spouse, will they get the $1,200 for the spouse with the SSN plus $500 for each child?

Yes, the IRS will pay the stimulus for the taxpayer with an SSN and $500 for each eligible child. If the taxpayer with an SSN is in the military and their spouse has an ITIN, they will start with the $2,400 for a married couple plus $1,500 for the eligible children ($500 per child).

Example 2: If a taxpayer is married filing jointly where both taxpayers and their children receive Social Security Disability and no other income, how would the taxpayers get the $500 per child?

While the IRS will send the taxpayer’s their stimulus payment based on their Social Security Benefits, the taxpayer must file a zero income return with the eligible children in order to receive payment for them.

Example 3:  Will a married filing separately taxpayer get the stimulus payment?

Yes, taxpayers who are filing separate returns will get their stimulus payments, assuming they have an SSN, are not a dependent of another taxpayer and have an AGI of less than $99,000 (or greater if they have eligible children on their tax return).

Example 4: If an individual only gets financial aid through the Veteran’s Administration (VA disability or Aid and Attendance payments), Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF also referred to as welfare), SNAP benefits (food-stamps), housing assistance, tax-exempt sick pay, or tax-free long-term disability or retirement, are they eligible for a stimulus payment? And if so, how do they request it?

The IRS has requested a zero income return to get the necessary information for these taxpayers.  Follow the “Non-Filers: Enter Payment Info Here” link on the home page of irs.gov to complete the necessary return.  When you reach the end of the return, enter the direct deposit information and file the return.

Example 5: If the taxpayer’s 2019 AGI is over $99,000 on a Single filer return but they have been out of work since February 2020, can they get a stimulus payment?

When the taxpayer files their tax return in 2020 they will use a new form to reconcile their stimulus payment against their eligible credit.  If they are owed any payment, it will be included as a refundable credit on the return and potentially included as part of the taxpayer’s refund.

Example 6: Do all taxpayers have to file a tax return to qualify for the stimulus?

Taxpayers who receive Social Security or Railroad Retirement Benefits do not need to file a return, unless they are otherwise required to. The taxpayer must file a zero income return if they have less income than the filing requirements and otherwise get a refund or if they have no taxable income. 

Will a taxpayer be able to check on their stimulus payment online or by calling IRS?

The IRS is creating a “Get My Payment” application for irs.gov.  The application should be available by April 17.

I do not normally file a tax return, what do I do?

On April 1, the IRS announced that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive a stimulus payment. Instead, recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits. The IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate payments to Social Security recipients who did not file tax returns in 2018 or 2019. To learn more about free file options from the IRS, please visit https://www.freefilefillableforms.com/#/fd/EconomicImpactPayment

Additionally, we have provided three Tax Situation Scenarios and guidance for preparing federal tax returns for individuals to qualify for economic impact payments where a tax filing requirement does not otherwise exist.

Scenario 1: Minimal Income

A taxpayer has no tax filing requirement due to low or minimal income items and consequently has no tax return obligation. The taxpayer has income below the IRS required filing thresholds. Taxpayer does have some small amount of earned income, passive income or other income, but not enough to create a taxable or filing-required situation. Taxpayer is not an eligible dependent on another taxpayer’s return. Examples include non-working adult, non-working college student, disabled person and anyone with very low income who is not required to file and otherwise would not file a tax return and who is not eligible to receive via Social Security benefits as described above. In order to get a tax return on the IRS system and otherwise qualify for the stimulus payment, taxpayer will file a tax return. Taxpayers will be allowed to enter direct deposit information when filing.

Scenario 2: No Income

A taxpayer has no tax filing requirement due to no income. The taxpayer is not a dependent for another taxpayer. Examples include totally non-working adults, totally non-working college students, disabled persons and anyone with no earnings activity whatsoever during the tax year and accordingly NO documents with earnings activity – active or passive or self-employed. Taxpayers will file a zero income return. Taxpayers will be allowed to enter direct deposit information when filing.

Scenario 3: Balance Due

Taxpayers with a balance due return will not be able to enter Direct Deposit information but the taxpayers should file their return as normal.  The IRS has launched its website where taxpayers should may enter their financial information for direct deposit of their stimulus payment.

Besides income levels, are there other eligibility requirements that apply to receive funds from the IRS?

To be eligible to receive stimulus funds from the IRS, all taxpayers on the return must have a Social Security Number that is eligible for work in the U.S (eligible SSN). Additionally, all children must have an eligible SSN or an Adoption Taxpayer Identification Number (ATIN).

If I owed taxes will I still get a stimulus payment?

The stimulus payment is not connected to taxes paid or refund received. Instead they are available to everyone at the rate of $1,200 for each taxpayer on a return ($2,400 for filing a joint return) and $500 for each eligible child. If a taxpayer’s income is at the threshold for their status, $75,000 for single (including married filing separately and qualifying widow), $112,500 for head of household, and $150,000 for married filing jointly, the amount of the stimulus check starts phasing out. 

I owe a federal, state, or local taxing authority money. Will my stimulus check go straight to paying off that debt?

Under the legislation, any tax debt owed to the IRS or a state or local taxing authority is not allowed to be withheld from Stimulus payments. However, delinquent child support payments that have been submitted by a State may be withheld from the Stimulus payments disbursed to a taxpayer.

How will I receive my stimulus payment?

The IRS plans to provide the stimulus payments to individuals and families by depositing funds directly into the same banking account reflected on the latest tax return filed.

According to the latest guidance, the IRS will develop an online portal for individuals to provide their banking information, so they can receive payments through direct deposit instead of a check in the mail.

The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.

Some clients are asking if the stimulus funds will be disbursed on the prepaid card where they taxpayer received their refund. If you did not receive a Refund Advance or select Assisted Refund, your stimulus should go on your prepaid card.

If you received a Refund Advance or used Assisted Refund and selected a prepaid card, it has yet to be determined how the IRS will distribute your funds.

When will I receive my stimulus payment?

The IRS has begun distributing stimulus payments and it anticipates additional funding in the coming weeks. Please be advised that the distribution of funds won’t likely occur at the same time, which means that a neighbor, friend, or family member may receive his or her funds before or after you, and Jackson Hewitt does not control when funds are released from the IRS.

If a taxpayer doesn’t file a 2019 return because personal information hasn’t changed will the IRS require the taxpayer to repay their stimulus?

If the taxpayer filed a 2018 return, the IRS will use that information. At this time the IRS will not require repayments of the stimulus payment. 

If the taxpayer is just now filing their 2018 and 2019 tax returns, will they get their stimulus payment?

Yes, the IRS will issue stimulus payments on returns filed now.

If a taxpayer received their stimulus payment based on their 2018 tax return, will they get any additional payment due after filing their 2019 tax return?

Currently, there is only one stimulus payment during the calendar year 2020. The taxpayer will reconcile their stimulus payment on their 2020 tax return.  If they are due more, the additional will be included on the tax return as a refundable credit.

If a taxpayer passes away after the tax return is filed, will the IRS still issue the stimulus payment?

The payment will go to the estate.

What do I do if I still need to file my taxes?

If you need to file your 2019 taxes, you can still have a Tax Pro file your taxes in these unprecedented times. In some areas, stores remain open and we’re following local and national health guidance to stop the spread of Covid-19. We’re also booking by appointment only and clients should confirm the appointment time with the location before arrival. Walk-ins would be available only if there is no one already waiting in the location. We also have document drop-off and upload to MyJH to limit time in an office. Clients who want to or need to stay home can use Jackson Hewitt Tax Pro From Home to have a Tax Pro file their return without ever coming into an office.

If you’d like to prepare your taxes on your own, you can use Jackson Hewitt Online. Simple filers – including those who only need to file to get their stimulus payment – can use Jackson Hewitt Online to prepare and efile their return for free.

What is the cutoff to file the 2019 tax return and still get the stimulus payment?

The IRS will not issue stimulus payments past December 31, 2020.  However, the final date to issue a payment or to file a return to get a payment in 2020 has not been determined by IRS at this time.

Remember, taxpayers who didn’t get a stimulus payment, or only got part of one, during 2020 may get the missing amount as a refundable credit when they file their 2020 tax return.  The requirements for the credit on the 2020 tax return are the same as the stimulus payment requirements. You must not be a dependent of another taxpayer, you must have a valid SSN, and your AGI must be below the phase out thresholds of $150,000 for MFJ, $112,500 for HOH, and $75,000 for all others. Taxpayers with an income over the threshold may still get a portion of the credit.

What’s Next

Additional information on state and federal responses to the Coronavirus pandemic can be found on the IRS’ Coronavirus Tax Relief page. The IRS is processing tax returns and providing refunds to Americans in the same time frame as always. As taxpayers lose jobs and work limited hours from home during this crisis, additional funding is as critical as it has ever been. Book an appointment today and get your maximum refund as quickly as possible.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

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