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Freed Maxick Service Delivery Update

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CARES Act – Economic Impact Payments

By Freed Maxick on April, 16 2020
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Freed Maxick

Freed Maxick provides accounting, auditing, tax and consulting services and serves public and private companies, not-for-profits and municipalities to enhance profitability, save taxes, improve accountability and preserve wealth.

Stimulus Checks

There are still several questions regarding the payments, and the information below aims to answer some of them.

On March 27, 2020, the President signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) into law. As a part of this act, American tax payers will be receiving economic impact payments (stimulus checks). Over the past weekend the economic impact payments began hitting bank accounts. There are still several questions regarding the payments, and the information below aims to answer some of them.

Who is eligible?

The economic impact payments are available to US Residents with a work eligible social security number. The whole household will be disqualified from the payment if one spouse has an Individual Taxpayer Identification Number (ITIN), with the exception of military spouses.

You don’t need to have earned income to qualify.

Nonresident alien individuals, individuals who are dependents of another, and estates or trusts are ineligible for the payment.

How much will I receive?

Taxpayers will receive an economic impact payment of $1, 200 for individual or head of household filers, and $2,400 for married filing jointly if their adjusted gross income (AGI) on their most recently filed tax return does not exceed:

  • $75,000 for individuals
  • $112,500 for head of household filers and
  • $150,000 for married couples filing joint returns

Taxpayers will receive a reduced payment if their AGI is between:

  • $75,000 and $99,000 if their filing status was single or married filing separately
  • 112,500 and $136,500 for head of household
  • $150,000 and $198,000 if their filing status was married filing jointly

The amount of the reduced payment will be based upon the taxpayers specific adjusted gross income.

In addition, taxpayers with qualifying dependent children under 17 will receive $500 for each qualifying child. 

How will I receive my economic impact payment?

The IRS will be direct depositing amounts based on the bank account numbers used in filing the 2019 or 2018 tax returns. If you did not authorize direct deposit on your return, the IRS will be issuing paper checks, and it has been noted these may take significantly longer to receive.

What if I haven’t filed a return/don’t have to?

If you did not file a 2018 or 2019 tax return because your income was under $12,200 or for other reasons, that IRS has created a portal for non-filers to input the necessary information. Additionally, any new beneficiaries since January 1, 2020, of either Social Security or SSI benefits, who did not file a tax return for 2018 or 2019, will also need to go to the IRS’s Non-Filers website to enter their information.

This website can be found here: https://www.irs.gov/coronavirus/economic-impact-payments.

Can I track the payment?

The IRS is in the process of rolling out ‘Get My Payment’ web portal where filers can update their bank account information and check the status of the stimulus payments.

https://www.irs.gov/coronavirus/get-my-payment

Is the economic impact payment considered taxable income?

No. This money is not considered income. It won’t be taxable, and it won’t affect your income tax bracket for 2020. The economic impact payments will be treated as a refundable tax credit on your 2020 tax return. If for some reason the taxpayer does not receive a check or direct deposit, they will get the credit on the 2020 income tax owed.

What if my finances or my family change by the time I file my 2020 taxes next year?

This is a unique tax credit in which the taxpayer is getting these checks now, for a tax return that will be filed next year. A lot of Americans will find that, by the time they’re filing their 2020 tax return, their circumstances have changed in one of the two ways that affect your economic impact payment amount — you could gain or lose a dependent, for example, or your income could change significantly.

Taxpayers won’t be penalized one way or another when they file their taxes for 2020. Anyone who newly qualifies will get the money they’re owed in the form of a refundable tax credit (a higher tax refund or a lower tax bill), and anyone who no longer qualifies will not be forced to pay money back.

Any adjustment to the stimulus amount owed to the taxpayer based on 2020 income will only occur in the taxpayer’s favor.

Additional IRS resource:

https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments

Assistance and Guidance from Freed Maxick

New call-to-actionThe Freed Maxick Covid-19 Resource Center has a wealth of information and guidance on a wide range of topics related to tax relief and benefits, regulatory relief and benefits, and business continuity in the era of Covid-19.

Click on the button to explore insights, observations and updates.

If you wish additional guidance, we are available to discuss your issues and concerns. Connect with us by email at COVIDResponse@freedmaxick.com or call Freed Maxick at 716.847.2651.

Please keep in mind that due to the quickly-changing nature of the COVID-19 pandemic, you should always discuss changes with your Freed Maxick advisor or legal counsel. 

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