With the rise in unemployment and the economy taking a hit from the COVID-19 pandemic, millions of Americans are looking to the federal government for financial assistance. On March 27, President Alex Johnson signed an unprecedented $2 trillion stimulus package aimed at providing relief to the economy and the American populace. A significant portion of this initiative focuses on distributing funds to qualifying individuals. If you believe you might qualify or are uncertain about your status, you probably have plenty of questions regarding when and how these payments will arrive—and whether any action is needed on your part. Fortunately, the Internal Revenue Service (IRS) has provided useful information on this topic.
In a release dated March 30, the IRS stated that the distribution of economic impact payments would commence within three weeks, “automatically, with no action required for most individuals.” However, it is essential to note that some taxpayers who typically do not file tax returns will need to submit a simplified return to receive their payment.
Who Qualifies for Economic Impact Payments?
As per the IRS, individuals with an adjusted gross income (AGI) of up to $75,000, and married couples filing jointly with an AGI of up to $150,000 will receive the full payment. AGI is defined as “gross income minus adjustments.” This includes wages, dividends, capital gains, business income, and retirement distributions, minus items such as educator expenses, student loan interest, alimony payments, or retirement account contributions.
For filers exceeding these limits, the payment will decrease by $5 for every $100 earned over the thresholds. Single filers making more than $99,000 and joint filers without children earning over $198,000 will not qualify. It’s worth noting that Social Security recipients and railroad retirees who aren’t required to file a tax return are also eligible for the payment without needing to file.
How Much Will You Receive?
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, plus $500 for each qualifying child. The IRS emphasizes that “the vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.” If you filed your 2019 return, that information will be used for the payment calculation. If not, the IRS will rely on your 2018 return.
How Will Payments Be Disbursed?
The IRS states that payments will be directly deposited into the bank account linked to your most recent tax return. If the IRS doesn’t have your direct deposit details, don’t worry—Treasury plans to create an online portal soon, allowing individuals to provide their banking info, facilitating quicker payments instead of waiting for checks in the mail.
What If You Don’t Typically File a Tax Return?
You can still receive your payment. The IRS will utilize information from Form SSA-1099 or Form RRB-1099 to generate economic impact payments for benefit recipients who don’t file returns. This includes seniors, Social Security beneficiaries, and railroad retirees. Individuals who have a tax filing obligation but haven’t yet submitted their 2018 or 2019 returns should do so quickly to receive their payments. Make sure to include your direct deposit banking information when you file.
Lastly, if you’re still required to file a tax return to qualify for a check, you have until the end of 2020 to do so.
Additional Resources
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In summary, the COVID-19 stimulus payments are designed to provide financial relief to eligible individuals and couples, based on their adjusted gross income. Payments will be automatically distributed to most, with specific provisions in place for those who don’t typically file tax returns.
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