As part of the economic stimulus package passed by the Congress under CARES (coronavirus aid, relief and economic security) act, individuals and small business owners can obtain crucial benefits to bridge them over until the economy starts recover. In this article, I will address the eligibility, application and other issues related to the one-time stimulus cash payments to Americans.
How much is the payment?
|Child under 17||Married|
| Dependent |
17 and over
Who qualify for the payments?
According to Wall Street Journal’s report the stimulus payments start “phasing out for those with income above $75,000 in adjusted gross income for individuals, $112,500 for heads of household (often single parents) and $150,000 for married couples. The payments start shrinking above those levels.” The payment will be reduced by $5 for every $100 over the above thresholds until it is completely phased out.
For those with no children, the benefits phase out completely at $99,000 for individuals and $198,000 for married couples.
Are green card holders eligible for the payments?
The answer is “yes” as long as you have a social security number and you meet the income qualifications for the payments.
Which AGI number to use?
The IRS will use 2019 tax returns to set the payment amounts and 2018 tax returns if 2019 tax returns isn’t available.
What about those who do not qualify for the stimulus payments now but lose substantial amount of income in 2020?
The good news is that the final amount of the benefits will be determined based on your 2020 income and settled on your 2020 tax return. So people may ultimately qualify for the stimulus money through a larger tax refund or smaller tax payment in 2021. And for those who eventually qualify for less money than they receive this year, the good news is that they do not need to pay back the extra money they got.
If I typically do not need to file income tax returns do I still get the payment?
Yes. According to IRS it will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments. Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time. (Sources: Internal Revenue Services)
What about income taxes on these payments?
These payments are not considered taxable income; therefore, individuals do not pay income taxes on these payments.
How do I apply for the payment?
You do not need to apply for the payment. The IRS will send the payments either directly to your bank accounts that are on file with the IRS or by checks via mail based on the qualifications outlined above.
Can my child who was born in 2020 get a payment?
Unfortunately, parents of child who was born in 2020 will not get a payment for that child now. But, if the parents’ income dropped low enough in 2020 to qualify they will either get extra $500 to their tax refund or get the amount subtracted from their income-tax bill when they file their 2020 tax returns in 2021.
Can I receive the payment if I owe money to the IRS for prior years?
IRS will not deduct the money from your qualified payments even if you owe the IRS back taxes or other liabilities.
What about child support?
If you are behind payments for child support the payments may be smaller for you.
How soon will I get the payment?
According to Treasury Secretary Steven Mnuchin’s comments last Thursday the direct deposit stimulus payments would begin in two weeks. For those who will get the payments via checks the paper checks will not be mailed until mid-May.