Economic Impact Payments: What you need to know

To our valued clients,

March 30, 2020

The Treasury Department and the Internal Revenue Service announced that distribution of the economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people.

Who is eligible for the economic impact payment?

Tax filers with adjusted gross income up to $75,000 for individuals and 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 by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.

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 and up to $500 for each qualifying child.

Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return.

There are million of Americans who are not required to file a tax return. Because the IRS will use the federal tax return to determine and send individual stimulus payments, these individuals are at risk of not receiving their stimulus payment Those people may have to file a basic return in order to get their cash. For now, the IRS website advises them not to do anything just yet.“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.

How will the IRS determine my economic impact payment?

For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.

For individuals concerned about getting their tax return filed, these economic impact payments will be available throughout the rest of 2020.

An online fix?

For people who normally receive a paper check, the Treasury is planning to create a web-based portal that will allow people to provide their banking information to the IRS online so that they can receive their payments immediately. The portal is expected to be created in late April or early May that will allow taxpayers to find out the status of their rebate payment and update direct deposit information.

Please call your trusted Machen McChesney advisor if you have any questions.

Best Regards,

Martin D. Williams, CPA,
Managing Partner
Machen McChesney, LLP