Last week, Trump announced an economic package that promised a stimulus package that will provide individuals with up to $1200 in the form of a stimulus check. But along with the cheers of rejoicing from a lot of taxpayers came a lot of questions:
Am I eligible?
How much will I get?
What do I need to do to get it?
How will it be taxed?
I’ll answer some of those below based on what we know so far.
Eligibility
In order to be eligible, you have to have filed a 2018 or 2019 tax return. (If you have not filed since 2017, you may be ineligible, unless you were not required to file a tax return.)
There are two distribution methods to receive the check: direct deposit or paper check. The government is looking into an online portal for individuals to update their information if their address or bank information has changed, but in the meantime, you should file a Change of Address or Direct Deposit form to make updates. The information on your return is what will be used to provide your payment, with direct deposit being the default method if available. The adjusted gross income (AGI) and filing status on the return will be used to determine the amount of your stimulus.
Amount
Individuals with adjusted gross incomes up to $75,000 a year will be eligible to receive the full $1,200. The payment amount goes down by $5 for every $100 in income above $75,000, and caps out once you make $99,000 or more.
Married couples are eligible for a $2,400 payment as long as their adjusted gross income is under $150,000 a year on the most recent tax return. Reduced checks, on a sliding scale, will go out to married couples who earn up to $198,000.
If you have children, you will receive $500 for each child up to a max of 2.
Next Steps
As far as we can tell, there is nothing to be done by the taxpayer. Based on your most recent return (must be 2018 or later), the IRS will either mail the check to you or direct deposit the check for you. Reports vary, but payments could go out as early as April 6 (although they are more likely to be ready mid-late April).
TAXABILITY
These payments are not taxable. The checks will technically be a credit on your 2020 tax return.
There is SO much information being sent around and the news is constantly changing, so keep up to date as best you can as the bill makes its way through the political process. In the meantime, use this post as a baseline in determining how the stimulus checks will affect you and your family, in addition to the following resources:
IRS Coronavirus Website - Provides up to date info from the IRS on how they are handling tax related changes as a result of COVID-19.
Stimulus check calculator (Forbes) - Use your income and status details to determine how much you should expect to get paid
FAQs (News12) - Info to answer additional questions you may have on how you will be impacted and additional requirements or steps
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