Thanks to the CARES Act, your Economic Impact Payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child will be deposited directly into the same bank account used on your tax return within three weeks. If you have not set up direct deposit information with the IRS, the Treasury plans to develop a web-based portal so that individuals may provide their bank information to the IRS online to receive electronic payments. Otherwise, you will receive your check in the mail.
For taxpayers who have already filed their 2019 tax returns, the IRS will use their 2019 return information to calculate the payment amount. For those who have not yet filed their 2019 return, the IRS will use information from their 2018 return to calculate the payment. For individuals who typically do not file a tax return, you will have to file a simple tax return to receive a payment, even though you are not otherwise required to do so.
However, per the Treasury Department and the IRS, Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts. The IRS will use the information on Form SSA-1099 and Form RRB-1099 to generate $1,200 Economic Impact Payments to Social Security recipients who did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits.
For most individual taxpayers, no action is needed on your part. The Economic Impact Payments will be available throughout the rest of 2020.
NOTE: Be aware that scammers are trying to take advantage of people. IRS agents will not call, text, or email taxpayers about their Economic Impact Payments. The IRS has said anyone offering a service to get you your payment faster is a scammer.
At IRS.gov/coronavirus, the IRS will provide people who normally do not file a return and do not receive Social Security benefits with instructions on filing a 2019 tax return with the necessary information to receive payment, including their filing status, number of dependents, and direct deposit bank account information. Other taxpayers, who have not yet filed a 2018 or 2019 tax return but are required to, must file a tax return for 2018 or 2019, which includes their direct deposit bank information to receive an Economic Impact Payment.
NOTE: Even though the IRS is issuing payments based on 2018 or 2019 tax returns, eligibility for the Economic Impact Payments will also be based on 2020 tax returns.
How will I be affected when I file my 2020 taxes?
The Economic Impact Payment is an advance of a 2020 refundable tax credit. If you do not qualify based on 2018 and 2019 returns, you may still qualify to receive the credit when filing your 2020 tax return. If you receive an advance payment and will be eligible for more based on your 2020 tax situation, you will receive the additional amount on your 2020 tax return. If you qualified in prior tax years but will not be eligible based on your 2020 tax return, you will not be required to pay the advance payments back.
At Henssler CPAs & Advisers, we are filing 2019 returns for college students whose parents haven’t filed claiming them as a dependent (and are phased out from other child tax credit) so that the college student can receive the $1,200 payment this year and not have to wait until next year.
Who’s considered a qualifying child?
A child who qualifies for the Child Tax Credit is a qualifying child for the Economic Impact Payment. Generally, the child must be your dependent, lived with you for more than six months of the tax year, you provided more than half of their support, and were younger than age 17 during the tax year in review. They must also be a U.S. Citizen, U.S. Resident or U.S. National. IRS Publication 972 gives more insight into Child Tax Credit Rules.
What about my college-age dependents? They qualify for EIC so aren’t they a qualifying child for this?
No, unfortunately, they are not. Dependents 17-24 do not qualify for the child tax credit, so they will not qualify for the additional $500 payment, even if they were claimed on your return. Students between ages 18-24 who were not a dependent on another return and had income but were not required to file should file their tax return as soon as possible to receive the stimulus payment amount.
If you have questions specific to your situation, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: email@example.com
- Phone: 770-429-9166
- Join the Conversation in Our Coronavirus Facebook Group