Stimulus Checks: How Much Will They Be? Who Is Eligible? (Coronavirus Stimulus Package Q&A)
There has been plenty of hype regarding the stimulus checks being sent to Americans. These checks are part of the CARE Act—which is meant to help ease the economic impact of the coronavirus, or COVID-19.
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There are still a lot of unknowns regarding how this will play out. Below I’ll outline some of the key things you need to know about the coronavirus stimulus package (or you can click here to watch a video instead).
How much will my stimulus check be?
The credit is $1,200 per person ($2,400 in the case of a married filing jointly return) plus $500 per dependent. If you are in a situation where you claim a dependent every other year–you will want to take this into consideration, as it could impact how much you receive.
You can use this stimulus check calculator to determine how much you’re likely to receive.
Who qualifies to receive a stimulus check?
The credit is a “phaseout credit” based on your adjusted gross income (AGI). Your AGI can be found on line 7 of your 2018 1040, and on line 8b on your 2019 1040.
A phaseout credit means that if your income is above a certain level, you will receive a reduced credit—and at a certain income threshold, no credit at all. For married filers, the AGI limit is $150,000. For anyone filing single or married filing separately, it’s $75,000.
The phaseout is 5 percent of the AGI that exceeds this amount. This means the credit is reduced by $5 for each $100 that your income exceeds the above-listed amounts.
Credits are not available for anyone filing single with AGI over $99,000 or $198,000 for married filing jointly.
Related: Coronavirus Content & Resources
Which tax return will the government use to determine if I’m eligible?
This is where you and your tax professional need to put in a little planning and thought. They will first look at 2019, then 2018. If neither are available, they may look at income as reported to the IRS regarding Social Security.
What does this mean?
- If you have already filed your 2019 tax return, this is what they will use to determine eligibility.
- If you have not yet filed your 2019 tax return, they will use your 2018 return instead.
- And if you didn’t file either (such is the case for many Social Security recipients whose income is too low to need to file), they will look at income reported by Social Security.
What this means is that if you do qualify based on 2018 but don’t qualify based on 2019, you may want to hold off on submitting your 2019 taxes. The deadline for 2019 1040 filing was pushed back to July 15th, 2020, so you have plenty of time.
On the flip side, if you don’t qualify based on 2018 but do qualify based on 2019, you will want to try to file your 2019 taxes ASAP.
I know what you’re thinking: What’s the cutoff date for submitting 2019 in order for it to be used as the qualifying return? The answer is we have no idea.
There wasn’t a provided set date of when they will pull returns to determine qualifying information. All we know is they should be sending out checks ASAP. So if you’re hoping to utilize 2019, you’ll want to get it submitted like… yesterday.
When will the stimulus payments arrive? How will I receive this money?
Coronavirus stimulus check should arrive within three weeks, according to Treasury Secretary Steven Mnuchin.
If you’ve received a tax refund in the last two years and the IRS has your direct deposit bank information on file, they will direct deposit the check.
If they do not have this information, or if there are issues with the information, there is a good chance you will receive a paper check. This would be sent to the official address they have on file.
If the bank account or address information the IRS has per your last filed return is no longer accurate, your best bet is submitting Form 8822 to update your address with the IRS as soon as possible.
Will I need to pay this money back?
Nope. This is not something you will need to pay back.
Per Forbes, while it is true that this is technically an advance of a refundable tax credit on your 2020 taxes, there will not be a payback component. It will be reconciled on your 2020 1040 tax return, which will be filed in early 2021.
“In other words, the bill created a refundable tax credit and the IRS is paying out the amount of that tax credit to eligible taxpayers now,” Forbes reported.
When you file your 2020 taxes, you have the opportunity to RECEIVE a credit on your taxes, but they are not enforcing the opposite.
Say you’ve already filed your 2019 1040, and your AGI is $200,000. You made too much money last year to receive a check at this point. However, early 2020 you were laid off due to circumstances beyond your control, and your 2020 income is only $70,000. This means when you file your 2020 tax return, you WILL qualify—and you’ll receive a credit on your tax return.
Now, let’s say the opposite is true. You filed your 2019 1040 and made $60,000, which qualified you to receive a check. Then in 2020, you receive a big raise and make $200,000. This means you don’t qualify for any additional credit on your taxes. But you will also not be required to pay back the credit you received based on your prior return.
Updates Will Be Forthcoming
There are still a lot of unknowns surrounding the actual implementation and “what if” scenarios. But just remember, we’re all in this together. As further clarification and more guidance become available, it will continue to be shared on the BiggerPockets platforms.
Join the discussion below.