Congress last week took steps to help individuals who are facing financial uncertainty during the COVID-19 pandemic.  They passed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act.  The CARES Act has many provisions that will help those with financial difficulties in the next coming weeks and months.  The act expanded unemployment benefits and established a one-time stimulus check to the majority of taxpayers.

Treasury Department and Internal Revenue Service will send the stimulus checks to qualified individuals.  There are many factors to consider when determining eligibility for the payment.

Are you Eligible For a Stimulus Check?

First thing is to determine, is whether one person and/or family are eligible for a stimulus payment.  The IRS named the payment an “economic impact payment.” the Act created the payment as a prepayment of a tax credit for the 2020 tax return.  Now since this is a prepayment of tax credit, it will be reconciled on your 2020 tax return. For example, if a taxpayer’s earned above the applicable threshold in 2018 and 2019 to be eligible, but had income that dropped in 2020, then he or she would be eligible for the credit when filing the return in 2021. Additionally, the current understanding is that those individuals who qualify for the stimulus based on their 2018 or 2019 returns, but do not qualify based on their 2020 income, will not need to pay any of the excess stimulus back.

The IRS considers the income on either 2018 or 2019 return

The IRS first looks at whether an individual has filed their 2018 or 2019 tax returns.  The vast majority of taxpayers have filed at least one of those two years, if not both. If both returns are filed, then the IRS reviews only 2019. If you have a return on file, the IRS will look at the Adjusted Gross Income (AGI) on the most recently filed return to determine if someone qualifies for a stimulus check.  Individuals who file single and no dependents will get the full $1,200.00; if their AGI for the most recently filed return between 2018 and 2019 was below $75,000.00.  For every $100.00 over $75,000.00, a single individual’s benefit will decrease by $5.00. The cap is $99,000.00. 

After the $99,000.00 threshold, a single taxpayer with no children would not get an economic impact payment.    Married couples have double the thresholds for income and will receive $2,400.00 if they meet the income requirements.  Parents also receive $500.00 for each qualifying child.  Qualifying children are most relatives under the age of 17. You can use this link to determine how much you may be receiving from the federal government.  

Some taxpayers will receive no money

Not all taxpayers will qualify for a stimulus check.  The economic impact payment is also only available to taxpayers with social security numbers; if a person files taxes under their ITIN, then he/she will not receive any money. However, there are certain exceptions to the ITIN rule for military families.

Additionally, all individuals over the age of 18 who are a dependent on another person’s tax return is not eligible for an individual or child stimulus payment. This will impact college students who file their own taxes, but are still dependents in their parent’s tax return. Similarly, it will mean that adults with disabilities and elderly people who are claimed as a dependent by family members will not receive checks.

The federal government will likely not intercept the funds to pay other debts

These stimulus checks are available to most individuals who usually have money offset by the federal government. Typically, the government will intercept funds sent by the IRS, if you owe a government debt, such as past due taxes, delinquent student loans, or similar. The CARE Act specifically provides that most offsets do not apply to the economic impact payment. However, this money will be offset, if you are delinquent on child support. Be sure to be on the lookout for your stimulus check, even if you owe the federal government money.

Where Will the IRS send the Money?

Second, the taxpayers need to determine is where the government will send the funds.  If you provided your bank account information to the IRS on your 2018 or 2019 return, the IRS will submit the economic impact payment directly to that account.  In the coming weeks, the IRS will create an online portal to allow taxpayers to submit necessary information to the government. This will speed up the process in which taxpayers receive their impact payment. 

The treasury department will mail a check to the taxpayer to the address of record for that taxpayer, if no bank account is on file.  This can become an issue with people who have moved and not yet filed their 2019 return, or for people who haven’t filed returns in the recent past.  A taxpayer can use Form 8822 to change their address with the IRS; however, since the IRS is operating with a depleted staff, these forms may not process in time for certain taxpayers to have their checks mailed to the proper address.

Do I have to do anything to Get my Stimulus Check?

Third, if you are a taxpayer who does not usually need to file a return because your income isn’t taxed or doesn’t reach the filing threshold you will need to file what the IRS is calling a “simple return.”  The IRS plans to post information on their website about what a “simple returns” will look like and how to get those filed.  The simple return tends to be for people strictly on social security or who may have been out of the work force for the past couple years.  

The stimulus checks will be available to taxpayers for the rest of 2020.  So, if you have not filed 2018 or 2019 you have until the end of the year to file those to become eligible for your economic impact payment.  The IRS advises all taxpayers to file their 2019 taxes as soon as possible. Filing electronically is the fastest way to get the return processed. The IRS will continue to updated their website with new information as it becomes available. 

Arthur Rosatti, Esq. is a licensed attorney authorized to represent clients with the Internal Revenue Service and the U.S. Tax Court. He has experience negotiating with various taxing agencies on behalf of individuals and companies.  If you have concerns about tax liabilities, making estimated tax payments, or similar, schedule an appointment with our office.