The impact of the 2019 Novel Coronavirus (COVID-19) pandemic has been significant, changing our daily lives at a rapid pace and presenting the economy with an unprecedented challenge.
There has been a wave of relief efforts and legislation aiming to minimize the impact on business and individual taxpayers alike. One effort aimed to provide direct financial assistance to all citizens is the Economic Impact Payments which began being issued by the IRS earlier this week.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for payments of up to $1,200 per adult whose adjusted gross income (AGI) is under $99,000 and an additional $500 per qualifying child.
The payment amount begins being reduced by $5 for each $100 of AGI in excess of $75,000 for single filers, $112,500 for head of household, and $150,000 for married filing jointly. This means taxpayers with no qualifying children may not be eligible to receive a payment if AGI exceeds $99,000 (single), $136,500 (head of household), or $198,000 (married filing jointly).
The Department of Treasury and the IRS have been working swiftly to implement methods of getting the funds to taxpayers as quickly as possible. Many will receive payment with no action on their part, but depending on your circumstances, the way your payment is sent may vary, with the last resort being a physical check mailed by the IRS, which may take weeks or months.
If you wish to avoid delaying receipt of your Economic Impact Payment, please note below and be sure to act accordingly.
The first set of payments that began earlier in the week were to those who had filed a 2018 or 2019 tax return with direct deposit banking information (for a tax refund). The payment amount is determined based on the adjusted gross income reported on their 2019 return (if filed) or 2018 return (if 2019 has not been filed).
Amounts are then automatically deposited directly into the bank account on record. The IRS is issuing letters to taxpayers within 15 days of the payment, confirming it was paid, and will provide information on how it was made and how to report any failure of receipt.
The second wave of automatic payments is expected sometime in April to Social Security (including disability) and Railroad Retirement recipients. These payments will be remitted in the same manner as benefits are normally received, whether through direct deposit or via a paper check. For those recipients with qualifying children, additional steps are required to receive the $500 credit for each. Similarly, the IRS is issuing letters within 15 days of the payment.
For those not covered under the scenarios above, the IRS has made new web applications available on their website in order to request and obtain your payment. These tools for filers and non-filers are available at https://www.irs.gov/coronavirus/economic-impact-payments.
Those not required to or who did not file a 2018 or 2019 tax return (non-filers) may select “Non-Filers: Enter Payment Info Here” and complete an application, identity verification, and provide where to send the payment. Similarly, for those who filed a 2018 or 2019 return, but the IRS does not have your banking information, select “Get My Payment” and complete a similar process.
Taxpayers are also able to check on the status of their payment, so this is a great place to start if you are not sure where to begin.
Lastly, the IRS will begin mailing checks to remaining taxpayers to their address on record. As of now this is expected to begin sometime in May but is expected to be a lengthy process. The IRS is instructing taxpayers to file 2019 if they need to update their address or other account information.
PLEASE BE CAUTIOUS! The IRS is urging taxpayers to specifically be on the look-out for scams that aim to utilize the Economic Impact Payments as a cover for their scheme to steal information or money. Please remember that the IRS will not call, text, email, or contact you via any other social media or chat platform requesting personal information.
If you have any questions or concerns regarding the Economic Impact Payments or the CARES Act, please contact Shannon & Associates or give us a call at (253) 852-8500 for assistance.
by Kevin Klinkman