- April 15, 2020
- Posted by: Dane Janas, EA
- Categories: Personal Finance, Personal Tax, Taxes
Note: Be vigilant against scams related to economic stimulus payments. Remember, the IRS, Treasury Department, or any other Federal or State government agency will not contact you by phone, e-mail, or text message to collect information for stimulus payment processing.
Economic Stimulus Payments have started being released by the IRS, with the first batch of payments hitting taxpayers’ bank accounts recently.
When is My COVID-19 Stimulus Payment Coming?
The IRS and Department of the Treasury have stated that they will be releasing payments in “phases” over the next four to six weeks. For obvious reasons, those who are eligible to receive their payments via direct deposit (see “How is my Stimulus Payment Being Sent?” below) will likely receive their payments first.
The IRS has just released a new tracking tool on their website to track the status of your Economic Stimulus Payment:
Note: This system is being quickly overwhelmed at its release, and has managed to crash just about every other system at the IRS upon being released to the general public. Be prepared for the website to be slow or non-responsive. You may possibly have to try a few times to inquire about your payment status.
How Much Will my Stimulus Payment be?
It depends on how much you make. Use the calculator at right to easily figure out your anticipated stimulus payout:
Single filers that have annual income of $75,000 or less will receive the full $1,200 single payout. Phaseouts will occur between $75,000 – $99,000 of annual income. This phaseout is $5 for every $100 of income that exceeds $75,000. If you’re a single filer making more than $99,000 annually, you’re out of luck.
Married filers that have combined annual income of $150,000 or less will receive the full $2,400 married payout. Phaseouts will occur between $150,000 – $198,000 of annual income. This phaseout is $5 for every $100 of income that exceeds $150,000. If you’re married and you and your spouse make a combined annual income greater than $198,000 annually, you’re out of luck.
Taxpayers that file as head of household that have annual income of $112,500 or less will receive the full $1,200 payout. Phaseouts will occur between $112,500 – $136,500 of annual income. This phaseout is $5 for every $100 of income that exceeds $112,500. If your annual income is greater than $136,500 annually, you’re out of luck.
Additionally, no matter what filing status you use – for each child under age 17 claimed on your tax return, your payout will increase by $500.
How is my Economic Stimulus Payment Being Sent?
In short, by direct deposit or a mailed, paper check. Here’s a few different scenarios on how this will shake out:
|Received refund via direct deposit or paid taxes due via direct debit||Received refund or paid taxes due via paper check|
|Have not filed your 2019 Federal tax return yet||Direct deposit to bank account shown on 2018 tax return||Paper check to “last known address”|
|Already filed your 2019 Federal tax return||Direct deposit to bank account shown on 2019 tax return||Paper check to “last known address”|
If direct deposited, the payment will post as “IRS TREAS 310” in your checking or savings account.
Is my Economic Stimulus Going to Reduce my 2020 Tax Refund?
No. It is an advance of a 2020 tax credit, but that fact will not have the effect on your refund that many taxpayers think it will.
For example, if you are a single filer with no dependents, you would be eligible for $1,200. Now let’s say your refund next year is $1,000. Your refund next year would be $1,000 + a $1,200 stimulus credit = $2,200. But, you already received an advance of $1,200, so your refund would still be the same $1,000.
In short, the money “comes out of” your 2020 refund, but your 2020 refund also increases by the amount of the credit you qualify for. It is not like your new 2020 refund would be $1,000 – $1,200 = -$200. And in the case where you get a check you don’t qualify for later, you do not have to pay it back (except for cases of fraud).
The wording about “an advance of a 2020 tax credit” was put into place to cover those individuals who will have life changes this year. For example, say you had a high-paying job in 2018 and 2019, making you ineligible for any stimulus payout. So you do not get a check. Then, you lose or were laid off from your job in 2020 due to COVID-19. On your 2020 taxes you would be able to claim the $1,200 credit, since you didn’t already receive a check, thus making your 2020 tax refund $1,200 higher. Same goes for people who may have had a child this year, etc., so they can get the full amount their now entitled to come next year’s tax return.
Are Economic Stimulus Payments Taxable?
No. They are not considered taxable income.
I Still Have Questions.
Check out our Economic Stimulus Payment Frequently Asked Questions page at www.boundlesstax.com/coronavirus-stimulus-payments.
The IRS has also created a dedicated COVID-19 page at www.irs.gov/coronavirus where more information is posted.