On March 27, 2020, the Coronavirus Aid, Relief Economic Security Act (CARES) was signed into law. One section of this $2trillion stimulus package authorized Economic Impact Payments (stimulus checks) to be issued in an attempt to provide a temporary boost to the economy that has currently been impacted by the spread of COVID-19 and the resulting business closures.
Who qualifies for the Economic Impact Payment? Individual income tax filers with adjusted gross income up to $75,000 and married couples filing joint returns with incomes up to $150,000 will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and joint filers with income above $198,000 and no children are not eligible to receive any stimulus payments.
How much will I get? Eligible taxpayers who filed tax returns for either 2018 or 2019 will automatically receive an Economic Impact Payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child under 17.
When will payments be sent? The current plan according to the government is to have the money sent electronically by the end of April and checks should be mailed out around that time as well. Based on previous stimulus packages that were sent out in 2001 and in 2008, most likely these payments will be received by the middle/end of May.
Do my 2018 and 2019 taxes need to be filed to receive a payment? Yes. The Internal Revenue Service is advising anyone that is required to file taxes for 2018 or 2019 to file as soon as they can in order to receive their Economic Impact Payment. Taxpayers should include direct deposit banking information on the return if they would like a quicker payment. If your 2019 tax return has not been filed yet, 2018 tax return information will be used to calculate your stimulus payment.
If I am not typically required to file a tax return, can I still receive a payment? Yes. People who typically do not file a tax return due to not being required to do so will most likely need to file a simple tax return to receive an Economic Impact Payment, even if no tax is due.
Am I going to have to pay extra taxes if I receive a stimulus payment? No, the stimulus payments that are being made do not count as taxable income. There will be no Federal, State, Social Security or Medicare taxes owed for any of the payments received.
Important Upcoming Tax Deadlines
April 15, 2020 – C-Corporation and Trust Tax Return Extension Filing Deadline
April 15, 2020 – Individual Tax Return Extension Filing Deadline
April 30, 2020 – 1st Quarter 2020 Payroll Returns Due