As the coronavirus pandemic forces businesses to shut down, people everywhere are losing their jobs, with a record 10 million Americans who’ve already applied for unemployment benefits.
In response to these events, Congress signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The purpose of this $2 trillion economic relief package — the most massive emergency aid package in U.S. history — is to stimulate the economy and support Americans affected by the coronavirus.
In one way or another, the relief bill will affect every working individual in the U.S. — including those who still have their job! And that’s exactly why you should know what’s in it.
Who gets a seat on Uncle Sam’s life raft?
If you’re a U.S. resident with a social security number, not claimed as a dependent and your gross income is less than $75,000, you’ll receive a $1,200 check from Uncle Sam. You’ll also get an extra $500 for each one of your children under the age of sixteen.
You don’t have to sign up or apply for anything to get your relief check. It’s a one-time payment based on your 2019 income. All you need to do to determine whether you’re eligible is to find out your adjusted gross income stated on your 1040 tax form.
What are the qualifying income requirements?
The more you made over the $75.000, the smaller your check gets. It gets completely phased out for filers whose income was above $99,000.
However, a married couple with two children that earns less than $150 thousand combined will still receive a check in the amount of $2400, plus $500 per child.
Is there a need to rush filing your tax return this year?
Here’s the deal. The IRS uses information from your tax return to determine the amount you should receive. If you haven’t filed your taxes for 2019 yet, the previous year’s data will be used.
However, if you haven’t filed either return yet, we recommend submitting your 2019 return as soon as possible, even if you don’t owe any taxes! By doing so, you will avoid being overlooked for your stimulus payment. Also, keep in mind that this year’s tax filing and payment deadlines have been extended.
There are several ways you can prepare your tax return. The most convenient one is to fill out the corresponding form online.
What if your income drops due to unemployment?
Those who’ve already filed their 2019 returns, but now find themselves unemployed, might be worried about not receiving any aid at all. However, there’s a condition in the stimulus bill program that ensures these people still get their stimulus check, just not immediately.
If your income has suddenly dropped because of unemployment, you’ll be able to claim the stimulus on your 2020 tax return.
Will you have to pay it back later?
Any stimulus payments, which will be available through the end of the year, won’t be treated as taxable income. It is, in fact, an advance refund on the taxes you’ll owe for 2020.
When preparing your 2020 tax return, any underpaid amount will be treated as a tax credit, while any amount overpaid will be forgiven. If it turns out that you would not qualify for the money based on your 2020 tax return, you do NOT have to return it. It’s yours to keep.
What are the options for Social Security recipients?
We have some good news for seniors. Those who rely solely on Social Security will not have to do anything extra to receive their stimulus payment. The IRS will use existing records from the Social Security Administration to process payments. While this may not affect you, it may still affect someone you look out for.
If you’re on Social Security and have been trying to figure out how to get your coronavirus relief check, the Treasury Department issued updated guidance for senior citizens. From now on, seniors will get the payment the way they usually receive their benefits.
How to get your stimulus check faster?
If there isn’t a bank account listed on your 2019 tax return (or 2018, if you have yet to file for last year), the IRS will send a physical check to your most recent address. In this regard, don’t forget to notify the IRS as soon as possible. Otherwise, your bill might be sent to the wrong address.
Individuals willing to receive their money via direct deposit should provide their banking information on the IRS website by mid-April. To request a direct deposit, fill in line 21 of your Form 1040 and file it to the IRS as you usually would.
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Perhaps, the stimulus payment isn’t a magic wand that will keep you afloat for years, but instead, it’s a temporary life raft. Americans need some time and help to keep money flowing through the economy.
If the coronavirus pandemic has impacted your income, step back, take a fresh look at your finances and plan for what comes next. Evaluate your financial situation and estimate how many expenses the relief check might cover. Focus on the next couple of months and develop a budget. Only spend on the essentials.