The IRS began depositing coronavirus stimulus relief checks this week to some eligible Americans. But questions about the payments, including how quickly Americans will actually receive them, still abound.
Below, CNBC Make It clarified seven myths about the stimulus checks. Here's what you need to know, from whether or not they are taxed to how long it will take for them to hit your bank account.
The stimulus checks are not taxable income. The checks — which are worth $1,200 for individuals earning up to $75,000 and $2,400 for couples earning up to $150,000, plus $500 for dependents under 17 — are structured as refundable tax credits. That is why even people who do not typically file tax returns qualify for these payments, according to the Tax Foundation, an independent think tank.
Assuming all of the information on your tax returns is correct, you will not repay the check next spring.
You may even receive more money when you file your 2020 taxes. While the checks are based off of your 2019 or 2018 returns to get you money now, they are technically credits for 2020 taxes, per the Tax Foundation. If it turns out that you should receive a larger credit based on your 2020 adjusted gross income (AGI), then you will receive the difference next year. "If a taxpayer's income drops in 2020, they will be eligible for any remaining rebate credit they were not able to claim using their 2019 or 2018 return," writes the Tax Foundation.
On the other hand, you will not be penalized by the IRS if your 2020 AGI is higher than this year's, according to the Tax Foundation. "If the amount of a credit a taxpayer qualifies for in 2020 is less than it was based on their 2019 return, it does not have to be paid back."
If the IRS has your direct deposit banking information, then you should receive your payment in the next few weeks, according to the agency. In fact, the U.S. Treasury Department announced Monday that tens of millions of Americans should receive their deposits by Wednesday, April 15, and the department "expects a large majority of eligible Americans will receive Economic Impact Payments within the next two weeks."
It is those who still need to file a return and those who get their tax refund via a paper check who will potentially wait months to receive their stimulus check, according to the IRS.
There is nothing most people need to do to receive a check. If you filed your tax return in 2018 or 2019 and the IRS has your banking information, you will receive a payment automatically.
The only people who might need to do something to receive a payment are low-income Americans who do not typically file a return and those who want to provide the IRS with their bank account information to get their payment faster via direct deposit, as opposed to a mailed check. An online portal to update your bank account information is expected to be available in the next few days on the IRS's website.
With a few exceptions, as long as you have a Social Security number and meet the income eligibility requirements, you will receive a check. Those who receive Social Security retirement benefits, as well as disability (SSDI) and Railroad Retirement benefits, will not need to file a new tax return to receive their payments, if they otherwise qualify; the IRS will use the bank account information it already has.
Everyone who is eligible will receive a check. If you haven't filed for 2019 yet, then the IRS will use your 2018 return to estimate your credit.
That said, the IRS "has also advised all taxpayers expecting a refund to file their 2019 tax return as soon as possible," says the Tax Foundation.
The IRS will not ask for money back. Coronavirus pandemic scams are proliferating, and the Federal Trade Commission warns of several related specifically to the stimulus checks. One of the most common: Scammers send a check purportedly from the "IRS," then claim that they overpaid and you need to wire some money back.
"If you get an official-looking check for more than what you were expecting — say, for $3,000 — the next call you're likely to get is from a scammer," warns the FTC. "They'll tell you to keep your $1,200 payment, and return the rest by sending cash, gift cards or money transfers." If you experience something like this, you can report it to the FTC.
Keep in mind that the IRS will not call, text or email you. "Scammers are sending official-looking messages — including postcards with a password to be used online to 'access' or 'verify' your payment or direct deposit information," warns the FTC. "The IRS will not contact you to collect your personal information or bank account. It's a scam."
Editor's note: This post was updated with the Treasury Department's most recent announcement.
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