With the impact of the Coronavirus crisis affecting people all over the country, the IRS and the Treasury Department have said that payments promised to Americans will begin being distributed in the next three weeks, providing a lifeline to those whose financial lives have been impacted by the pandemic. This Washington Post article provides a specific timeline for when individuals can expect to receive their payment. For most people, the distribution will be automatic and there will be no action required of them.
Who does the economic impact payment help?
The full $1,200 economic impact payment will be sent to single taxpayers whose adjusted gross income (AGI) did not exceed $75,000 in 2018 or 2019, and $2,400 will be sent to married couples filing joint returns for whom AGI did not exceed $150,000. There will be an additional distribution of up to $500 for each qualifying child. The distributions will be reduced by $5 per $100 above that threshold until single filers reach the limit of $99,000 and joint filers with no children reach the limit of $198,000. People who earn above that point will not receive payments.
Individuals are also eligible to receive the payment with no action required on their parts if they are those who are not required to file a tax return as a result of being railroad retirees or Social Security recipients. However, for the millions of Americans whose incomes are low enough that they are not required to file a tax return, receipt of the individual stimulus payments are required to take an extra step. The only way that the IRS knows who to send the economic impact payments to is through existing federal tax return records, so if you haven’t filed a tax return in the last couple of years, you may end up needing to submit a basic return to ensuring that a check gets sent to you (the keyword is may). According to information on the IRS website, the agency does not want people rushing to fill out basic tax returns that may not be needed. A notice on the official site reads in part, “People, like low-income taxpayers and some veterans, who generally don’t file or are not required to file should wait,” the IRS states on its website here: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
What will the determination of my economic impact be based on?
The primary source of info regarding an individual or couple’s economic impact will be 2019 tax returns for anybody who has already submitted them, but there are many who have not yet submitted their returns. In that case, the IRS will turn to the returns from 2018 to determine eligibility. The bank account referenced on those tax returns will be the one into which the payment will be deposited. Not having your taxes filed yet doesn’t preclude your receipt of the payment which is good news. Economic impact payments will be available for the balance of 2020, so just make sure that you get your tax returns in as quickly as possible, and definitely before year-end.
What if I haven’t provided a direct deposit bank account?
Not all taxpayers opt to have their refund check deposited directly into their account, and as a result, the payment may end up being delayed. If you have questions about this and how you will be affected by this, please contact us today!
What is the specific timeline for payments to be made?
Though payments will begin to be sent out as early as April 9th, according to the Washington Post there are some taxpayers whose payments will not be sent until September. Individuals and joint filers who have not provided banking information for direct deposit will be receiving checks rather than automatic payments, and they will not begin to be sent until April 24th. Only about 1 in 5 taxpayers do not take advantage of direct deposit for their refunds, and the rest — including Social Security recipients — will start receiving payments much sooner. In fact, a spokeswoman for the Treasury Department indicating that between 50 million and 70 million Americans will see their payments deposited by April 15th.
According to the latest updates, the Treasury Department is expected to take the first step today, Friday, April 10th, which involves clearing the payments that will be directly deposited. Banks expect a Treasury Department transmission Friday to confirm the money will reach the correct accounts. The IRS is meant to start processing the payments on Monday, April 13th and direct deposits would show up in recipients’ bank accounts by Wednesday.
Those who have not previously submitted their bank information will be able to do so through a portal created by the IRS expected to go live the week of April 13th. Once you submit that information, the IRS will prioritize payments for America’s lowest-income Americans using the following schedule:
- April 24 – Individuals with incomes of $10,000 or less
- May 1 – Earners of $20,000 or less
- May 8 – Earners of $30,000 or less
- May 15 – Earners of $40,000 or less
Payments will continue to be sent out at a rate of 5 million checks a week, based on increasing income category increments of $10,000. Those at the highest income level eligible to receive payments should expect their payment to be issued on September 4th, while those that need to apply for checks as a result of missing information can expect to receive the payments on September 11th.