The $2 trillion coronavirus stimulus bill, signed into law on March 27, is the largest emergency aid package in U.S. history. Known as the CARES Act, it will send money directly to tens of millions of Americans affected by the coronavirus. Of the hundreds of questions we received about this new legislation, the biggest concern is just who is eligible for this relief payment. I spoke with several financial and tax experts to get answers to your questions.
If you haven't filed taxes yet for 2018, will you still receive a check because of the coronavirus?
You should file a tax return as soon as possible. The IRS will use information on your 2018 or 2019 tax return to determine whether you are entitled to an "economic income payment" and the amount you should receive. If you didn't file a tax return for 2019, the agency will use your 2018 return.
Eligible taxpayers who filed tax returns for either 2019 or 2018 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.
Individual tax filers with adjusted gross income up to $75,000 (up to $150,000 for married couples filing joint returns) will receive the full payment. For filers with income above those amounts, the payment amount is reduced and then phased out for individuals whose income exceeds $99,000 (or $198,000 for joint filers with no children).
"Anyone who has not filed either return should file a return for 2019 as soon as possible, even if they owe no taxes," said tax policy expert Richard Winchester, a visiting professor at Seton Hall University School of Law. "That will prevent them from being overlooked for these payments." Also, make sure to include direct-deposit banking information on your return so the IRS knows where to send the check.
There are several ways to file your tax return for free. Taxpayers with incomes below $69,000 can file the IRS' Free File software to do their federal returns. If your income is above $69,000, fillable forms are available for free on the IRS website. Online tax preparer TurboTax is also offering its basic tax-prep service for free until April 4, allowing you to connect with a CPA or enrolled agent via video chat who will review your tax return line by line.
We have an adjusted gross income of $155,000 for 2018 and we filed a "married filing joint" return. Does that mean we're not getting any stimulus money?
You and your spouse should still be eligible to receive a stimulus check based on your 2018 income. It won't be the full payment, but a reduced amount.
To receive the full $2,400 payment, married couples who filed a joint return must have had an adjusted gross income in 2018 (or 2019) that is less than $150,000. If your income was higher, the payment amount will be reduced by $5 for every $100 above the $150,000 threshold, according to the IRS. Based on your $155,000 income in 2018, your payment would be reduced by $250. Therefore, you should receive a payment of $2,150.
If your 2019 income was below the threshold, tax advisors suggest filing your return as soon as possible to qualify for the full payment. "The IRS wants the most up-to-date information about your adjusted gross income. That's why you should file your 2019 taxes, which is what they will use to determine your stimulus check," said Lisa Greene-Lewis, a CPA and tax expert at TurboTax.
Even if your 2019 income was higher than 2018, don't delay in filing your return, she says. "You may be eligible for a refund once you go through all of the credits and deductions that you qualify for. Last tax season about 72% of taxpayers received a refund worth about $3,000. That's a lot of money that people could use right now."
Will the check be made out to my husband or me, or will each of us receive one made out to us individually?
For eligible recipients who filed a tax return in 2018 or 2019, the IRS says the economic impact payment will be deposited directly into the same banking account that is reflected on the return. If you do not have direct deposit, a paper check will eventually be sent by mail to the address that is on your tax return, but that could take several weeks, even months. "If you file 'married filing jointly,' the check will be sent to both of you. Both of your names will be on the check," Greene-Lewis said. "If you file 'married filing separately' and file two separate returns, you'd receive two separate checks made out in each of your names."
Will people on Social Security or disability be receiving a check for the stimulus package? If so, do you know how much they will receive?
If you receive Social Security benefits for retirement, disability or Supplemental Security Income, you are eligible to receive a stimulus check as long as you do not exceed the income limits. "If someone did not file a return for 2018 or 2019, they could still receive a check if they received Social Security retirement or disability benefits in 2019," Winchester said.
On April 1 the Treasury Department and IRS announced, "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."
According to the Treasury, "The IRS will use the information on the 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."
Will a person who owes back taxes receive any money?
If you meet the income guidelines, tax experts say the IRS will still issue a stimulus payment even if you owe back taxes. The only exception to this is if you owe child support payments. "They waived offsets, like federal and state taxes not paid or student loans not paid," Greene-Lewis said. "They waived offsets in any situation except unpaid child support."
Can I not accept the money the government wants to give me so I don't have to pay it back later?
As of right now, there is no way to "opt out" of receiving a payment if you qualify. "Payments will be automatically made to every eligible person. If you accepted a tax refund by direct deposit, the government will send the funds directly to you the same way," Winchester said. "This payment is not taxable income. Instead, it is an advance refund on the taxes you will owe for 2020. If it turns out that you would not qualify for the money based on your 2020 tax return, you do not have to return it. It's yours to keep."
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