Stimulus Checks Approved. How much will I get?
Now that the Stimulus package was signed by the president and everything is black and white, we took the time to gather all the information you need to know about the Stimulus check.
The most talked about provision is the “recovery rebates” for individuals. These rebates are actually credits allowed on taxpayers’ 2020 tax returns that will be paid out in advance by the Treasury.
I've been getting many questions regarding the new coronavirus stimulus package that was announced this past week.
As you may know, many households will be receiving a check in the next two weeks.
How much your household will receive depends on a few variables.
Recovery Rebates for Individuals
• Recovery rebate for each taxpayer of $1,200 ($2,400 for joint returns).
o Plus $500 for every qualifying child.
o Rebates are means tested and begin phasing out after $75,000 adjusted gross income (AGI) (single), $112,500, (HoH), and $150,000 (MFJ).
o The rebate amount is reduced by $5 for each $100 a taxpayer’s income exceeds the phase-out threshold and completely phased-out at $99,000/$198,000 (single/MFJ).
o No payment without proper tax identification numbers.
• IRS will base these amounts on the taxpayer’s 2019 tax return
o 2018 tax return if 2019 not yet filed
o If no filing for either year, then based on information provided by Form SSA-1099 or RRB-1099, 2019 Social Security Benefit Statement
• The Department of Treasury is required to conduct a public awareness campaign.
The more you earn, the less money you’ll get. If you earn $75,000 or less as an individual, you’ll get the full $1,200. If you earn more than that, $5 will be subtracted for every additional $100 of income. (The checks phase out completely if you earn $99,000 or more.) The same sliding scale applies for couples earning between $150,000 and $198,000.
I found a great article that breaks down the details of the stimulus checks including a calculator for you to find out what you may be getting.
FIRST, read on for the details of what you'll need to fill in the calculator to get your possible check amount.
Your amount is based on your most recent tax year filed.
So, if you've already filed your 2019 taxes that's what you need to use.
If the last return you filed was 2018 you'll use your 2018 tax return.
What you need to know:
☑️Your AGI (Adjusted Gross Income)
2018 - Line 7 of your 1040 form
2019 - Line 8b of your 1040 form
☑️Your Filing Status (This is on the very top of your 1040 underneath the title)
☑️How many children UNDER the age of 17 you claimed.
Dependents are listed on the 1040 - you can only count those UNDER 17
This should give you an idea what you may be receiving in the next two weeks.
The Stimulus Check is a 2020 Refundable Tax Credit. This means the final amount of your credit (check) depends on your 2020 Income. When you file your 2020 Tax Return a reconciliation on your income with the amount received will be done.
Where an advance rebate is more or less than allowed because an individual’s filing status or family size is different in 2020 or the credit is subject to phase-out based on 2020 income, the adjustment is made on the 2020 tax return. Thus, individuals may be entitled to an additional credit. Advance rebates that are more than is allowable for 2020 must be reduced (but not below zero) by the advance rebates made or allowed to the taxpayer during 2020. This means that individuals who otherwise wouldn’t have a 2020 return filing requirement based on their income will likely have to file to reconcile their advance rebate with their actual credit.
The rebates will not be paid to individuals who are claimed as a dependent of another on a prior year return.
What happens if my Adjusted Gross Income is more than $75,000 as single or as Married File Jointly?
To demonstrate how the payments are calculated, here is an example of a married couple with two kids. Combined, the couple earns a total of $160,000. They don’t qualify for the full $2,400 because they earn $10,000 over the cap, but they’ll get a reduced check.
To calculate the amount you’ll get, the calculator divides the excess by $100 and multiples that amount by $5.
Here’s the formula:
difference = (excess / $100) * $5
Here’s what the formula would look like for the family of four:
($10,000 / $100) * $5 = $500
That means the family is eligible for $1,900 ($2,400 - $500). Plus, they’ll get another $1,000 — $500 per kid — for a total of $2,900.
When it comes to getting your money, you don’t need to apply for the checks. The money will automatically be transferred directly to the bank account you included in your most recent tax return. If the IRS doesn’t have your direct deposit information, you’ll get a check in the mail.
What if my recent income made me ineligible, but I anticipate being eligible because of a loss of income in 2020? Do I get a payment?
The plan does not help people in that circumstance now, but you may benefit once you file your 2020 taxes. That’s because the payment is technically an advance on a tax credit that is available for the entire year. So it will depend on how much you earn.
Let’s keep in mind something really important, even though you will receive cash, this is not money the government is just giving away, this is the credit for your 2020 Taxes. Perhaps, you didn’t receive it because your income in 2019 was higher than the cap, but your 2020 Income does qualify, this means you might be credited.
Will I have to pay this back?
That's still an open question. The way the law is written, the checks that will be sent now are actually just advanced payments of a new refundable tax credit for the 2020 tax year. We don't know yet how the IRS will treat stimulus payments that are more than the 2020 tax credit amount. (If the check is less than the authorized credit, you'll get the difference when you file your 2020 return.)
How will I get my check? What if I moved recently?
If you've gotten a tax refund in the last two years by direct deposit, that's where the money will be sent. If not, the IRS can mail a check to your "last known address," and it has 15 days to notify you of the method and amount of the payment. They'll send a phone number and appropriate point of contact so you can tell them if you didn't receive it.
If you’ve moved recently, it may be a good idea to notify the IRS as soon as possible. The IRS also suggests that if you haven't yet filed a tax return for 2018 or 2019, do it as soon as you can, so that the government has your up-to-date information on file. Use form 8822 to notify the IRS
Will I receive a check if I owe child support, student loans, or income tax?
The stimulus check won't be in the mail for Americans who owe child support, in other words, Americans who are overdue on child support could see their cash payments reduced or eliminated, however, back taxes or late student loan payments don't disqualify people from getting the full amount they're eligible for.
What if my income is higher in 2020?
You don’t have to pay the government back. Technically a person’s 2020 income is what qualifies them for a payment. Since no one knows their total income for 2020 yet, the government is using tax returns from 2019 and 2018 to figure out who qualifies for a check. If you get a payment and then your 2020 income is higher and thus merits a reduced payment or no payment, the money does not have to be paid back.