On March 27, in response to the COVID-19 global pandemic, Congress passed the Coronavirus, Aid, Relief, and Economic Security (CARES) Act.
The IRS and the Treasury Department say Americans will start receiving their economic impact checks within the next few weeks.
The payments are part of the $2.2 trillion rescue package signed into law by President Donald Trump aimed at combating the economic ravages of the coronavirus outbreak.
Most people don’t need to do anything to get the money. But some populations who don’t typically file returns – including senior citizens and low-income people who might not traditionally file tax returns – may be confused. The government urged them to file taxes and then later reversed course for certain groups.
The IRS and Treasury have updated their guidance on how to ensure you get paid. Here are the basics:
RECOVERY REBATES (also referred to as “stimulus payments”)
Who is eligible for the payments?
Anyone earning up to $75,000 in adjusted gross income and who has a Social Security number will receive a $1,200 payment. That means married couples filing joint returns will receive the full payment – $2,400 – if their adjusted gross income, which what you report on your taxes, is under $150,000.
The payment steadily declines for those who make more. Those earning more than $99,000, or $198,000 for joint filers, are not eligible. For heads of household with one child, the benefit starts to decline at $112,500 and falls to zero at $146,500.
Parents will also receive $500 for each qualifying child.
What if my income was above the threshold in 2019, but I’ve lost my job due to the coronavirus? Can I still get a rebate check?
If your income in 2019 was in the phase-out range you would still receive a partial rebate based on your 2019 tax return. However, the rebate is actually an advance on a tax credit that you may claim on your 2020 tax return.
If your income is lower in 2020 than in 2019, any additional credit you are eligible for will be refunded or reduce your tax liability when you file your 2020 tax return next year.
Are individuals with little to no income or those on means-tested federal benefits, such as SSI, eligible for a recovery rebate?
Yes, there is no qualifying income requirement. Even individuals with $0 of income are eligible for a rebate so long as they are not the dependent of another taxpayer and have a work-eligible SSN.
Are seniors whose only income is from Social Security or a veteran whose only income is a veterans’ disability payment eligible?
Yes, as long as they are not the dependent of another taxpayer. The bill also provides IRS with additional tools to locate and provide rebates to low-income seniors who normally do not file a tax return by allowing them to base a rebate on Form SSA-1099, Social Security Benefit Statement or Form RRB-1099, which is the equivalent of the Social Security statement for Railroad Employees. However, seniors are still encouraged to file their 2019 tax return to ensure they receive their recovery rebate as quickly as possible.
What do I have to do to get the check?
For most people, nothing.
The money will be directly deposited in your bank account if the government has that information from your tax return. If you haven’t filed your 2019 taxes, the government will use information from your 2018 taxes to calculate your payment and determine where to send it.
I don’t usually have to file taxes. Do I still get a payment?
But here is where it gets a little confusing. The IRS and Treasury said Monday that people who are not required to file a tax return – such as low-income tax payers, some senior citizens, Social Security recipients, some veterans and people with disabilities – will need to file an abbreviated tax return to receive the economic impact payment. It would provide the government basic details including a person’s filing status, number of dependents and direct-deposit bank information.
However, the Treasury later reversed course, saying that senior citizens, Social Security recipients and railroad retirees who are not typically required to file tax returns will not need to file a tax return to get the payment.
Instead, payments will be automatically deposited into their bank accounts or sent by mail, however they typically receive their benefits.
Lawmakers and others complained that the requirement would create extra work and confusion for a vulnerable population, particularly as the government has their information and authority to use it to deliver payment.
The IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate payments for Social Security recipients who did not file tax returns in 2018 or 2019.
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.
The remaining groups – low income individuals, some veterans and people with disabilities – will still have to file an abbreviated tax return if they do not receive Social Security.
I haven’t filed my 2018 or 2019 taxes. Will I still get a payment?
Yes, but the IRS urges anyone required to file a tax return and has not yet done so for those years to file as soon as possible in order to receive an economic impact payment. Taxpayers should include their direct-deposit banking information on the return if they want it deposited in their account. This could be accomplished for free online from home using the IRS Free file program at https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
I didn’t use direct deposit on my taxes, what can I do?
The government will default to sending you the check by mail if you did not use direct deposit.
However, IRS and Treasury say that they will develop an online portal in the coming weeks for individuals to provide their banking information so that they can receive the payments immediately instead of in the mail. It has not yet set a deadline for updating that information.
If I have a past due debt to a federal or state agency, or owe back taxes, will my rebate be reduced?
No, the bill turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support payments that the states have reported to the Treasury Department.
I need more time to file my tax returns. How long do I have to get the payment?
The IRS says people concerned about visiting a tax professional or local community organization in person to get help with a tax return should not worry. The economic impact payments will be available throughout the rest of 2020. However, the deadlines to file and pay federal income taxes have been extended to July 15.
The IRS is offering tax help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19) at https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments.
Who will be covered by the expanded program?
The CARES Act includes far more workers than are usually eligible for unemployment benefits, including self-employed people and part-time workers. Those who are unemployed, are partly unemployed or cannot work for a wide variety of coronavirus-related reasons will be more likely to receive benefits.
How much will I receive?
It depends on your state. Generally speaking, under the plan, eligible workers will get an extra $600 per week on top of their state benefit.
Are gig workers, freelancers and independent contractors covered?
Yes, self-employed people are eligible for unemployment benefits under the CARES Act. Self-employed workers will also be eligible for the additional $600 weekly benefit provided by the federal government.
What if I’m a part-time worker who lost my job because of a coronavirus reason, but my state doesn’t cover part-time workers? Am I still eligible?
Yes. Part-time workers are eligible for benefits, but the benefit amount and how long benefits will last depend on your state. They are also eligible for the additional $600 weekly benefit.
I was about to start a new job and now can’t get there because of an outbreak.
You’re eligible for benefits. You will also be covered if you were immediately laid off from a new job and did not have a sufficient work history to qualify for benefits under normal circumstances.
My employer shut down my workplace because of coronavirus. Am I eligible?
Yes. If you are unemployed, partly unemployed or unable to work because your employer closed down, you’re covered under the bill.
Whom does the bill leave out?
Workers who are able to work from home, and those receiving paid sick leave or paid family leave are not covered. New entrants to the work force who cannot find jobs are also ineligible.
How long will the payments last?
Many states already provide 26 weeks of benefits, though some states have trimmed that back while others provide a sliding scale tied to unemployment levels. The bill provides all eligible workers with an additional 13 weeks. So participants in states with 26 weeks would be eligible for a total of 39 weeks. The total amount cannot exceed 39 weeks, but it may be shorter in certain states. The extra $600 payment will last for up to four months, covering weeks of unemployment ending July 31.
How long would the broader program last?
Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on Jan. 27 and through Dec. 31.
I’m already receiving unemployment benefits. Will I receive any help?
Yes. Even if you’re already receiving unemployment benefits for reasons unrelated to the coronavirus, your state-level benefits will still be extended by 13 weeks. You will also receive the extra $600 weekly benefit from the federal government.
My unemployment recently ran out – could I sign up again?
Yes. If you’ve exhausted your benefits, eligible workers can generally reapply. But how much you get and for how long depends on the state where you worked. Everyone gets at least another 13 weeks, along with the extra $600 payment through July 31.
How long will I need to wait for benefits?
States have been incentivized to waive the one-week waiting period, but it’s unclear how long it will take to process claims – especially with state offices so strained by a flood of them.