Stimulus Relief Checks: Find Out How to Receive Up to $1,200
By now, you’ve likely heard most Americans will be getting stimulus checks.
These checks are designed to help Americans deal with the massive disruption the coronavirus has had.
On March 27, 2020, President Trump signed The CARES Act into law. This is the law that details how stimulus checks will be determined.
Unfortunately, signing the law doesn’t instantly send out checks or direct deposits. It takes time for the government to get everything in order to send out the money.
Here’s what you need to know about how it should work according to the guidance released so far.
Watch Out For Scams
Before we get started, it is absolutely imperative to watch out for scams about these stimulus checks. The last thing anything wants is losing their check to a scammer.
While you may not fall victim to a scam, your loved ones may be more susceptible to doing so.
The FTC has an ongoing list of coronavirus-related scams to watch out for. They specifically mention three things you need to know about stimulus checks to avoid getting scammed out of your check.
No fee or payment to collect your check
First, the federal government will not require you to pay money to get the check.
If someone is asking you to pay to get your check faster, they’re scamming you.
Do not disclose sensitive personal info
Next, never give out sensitive information on the phone to anyone trying to help you get your check. The government has the information it needs or will collect it in an official way, such as a tax return submitted to the IRS.
Don’t give out your Social Security number, bank account, credit card information or any other sensitive information on the phone.
There's no way to expedite the relief check
Finally, anyone who tells you they can expedite your check or get it to you today is lying.
You have to go through the official process.
This takes time.
While the FTC hasn’t issued guidance on this yet, make sure to keep a close eye on your mailbox if it isn’t locked and secured. Once checks start going out, local scammers may try to steal your check out of your mailbox.
One way to prevent this is by signing up for Informed Delivery with the USPS. This service is free and emails you scanned images of the mail you should be receiving that day.
Keep an eye on these emails for your stimulus check.
When you see it is coming, make sure to watch out for the mail person and retrieve your check as soon as it is delivered.
How Much Money Can I Get?
The amount of money you get in your stimulus check will vary based on your circumstances.
In general, you can expect a $1,200 check as an individual or a $2,400 check as a married filing jointly couple.
To get this check:
- You cannot be claimed as a dependent on someone else’s tax return.
- You must also have a work-eligible Social Security number.
Additionally, you can get $500 per qualifying child.
A qualifying child is any child that qualifies for the child tax credit. Without getting bogged down in details, this is normally children under the age of 17. Exceptions do apply.
Do I Qualify for a Stimulus Check or Direct Deposit?
There are income limits that may disqualify you from getting a check.
Your income will limit the dollar amount of the check you receive.
Specifically, the income limit is based on your adjusted gross income (AGI) from your tax return.
The AGI limit is based on your tax filing status. To get the full check amount, your AGI must be at or below the following levels:
- Single - $75,000
- Head of household - $112,500
- Married filing jointly - $150,000
For every $100 of income above that amount, your check will be reduced by $5.
If you’re single with no children, your check will decrease to $0 if your income exceeds $99,000. The amount that results in a $0 check is $198,000 for those filing married filing jointly.
Head of household filers with one child are completely phased out when their income exceeds $146,500.
If you fall anywhere in between, you’ll still get a check. The check will be for less than the full amount.
How Does the IRS Find My AGI?
To find your AGI, the IRS will first look at your 2019 tax return if you filed it.
If you didn’t, they will look back at your 2018 tax return.
If you haven’t filed either of these tax returns, the IRS says you will have to file a simple tax return to claim your payment early.
This isn’t how the law was necessarily written.
This may change in the future, so keep an eye out for changes to the IRS guidance.
The simple tax return won’t require you to pay taxes. It will be used to collect important information needed to process checks.
This includes information such as your filing status, number of dependents and direct deposit bank account.
Changes in AGI
Some people may not qualify due to high AGI in 2018 or 2019 but now may have no income due to coronavirus.
The bad news:
You won’t get a stimulus check if you don’t qualify based on prior tax returns due to high AGI.
The good news:
You can still claim the tax credit that provides this refund when you file your 2020 tax return in early 2021 if you qualify.
Don’t worry about the reverse happening.
If you qualified in 2019 or 2018, the IRS uses your previous AGI and your 2020 AGI would exclude you, you don’t have to pay the credit back according to the Tax Foundation.
How Will They Know Where to Send My Money?
The IRS will use the information from your most recent tax return to determine how and where to send the money.
- If you used direct deposit information to receive a refund, the IRS will send your refund to that bank account.
- If the IRS doesn’t have your bank account information, the check may be mailed to you based on your tax return address.
There are plans to collect direct deposit information from taxpayers.
The IRS says the Treasury will be launching a web-based portal to collect banking information for the IRS.
This would allow you to get a direct deposit which will be faster than waiting for a check in the mail.
The website isn’t set up yet.
That said, the IRS will likely publicize it once it is ready.
How Can I File a Tax Return to Qualify for My Stimulus Check?
If you haven’t filed a 2018 or 2019 tax return but would qualify for the stimulus check if you did, you’re in a unique situation.
Filing a tax return will qualify you to receive the stimulus check as long as you meet the requirements.
Additionally, filing your 2019 tax return may give you the opportunity to provide your direct deposit information before the IRS portal is launched.
Similarly, if you filed a 2018 tax return and didn’t qualify but would, based on your 2019 tax return, you may want to file your 2019 tax return as soon as possible.
Be careful when filing your 2019 tax return, though.
They aren’t technically due until July 15, 2020.
If your 2019 return would lower or eliminate your stimulus check payment, filing your return may not be a smart move.
Consult a tax professional to find out what the best option is for you if you haven’t filed your 2018 or 2019 tax returns yet.
How Can I Update My Direct Deposit Information?
The IRS may not have your direct deposit information. The information they do have may be for an outdated account.
If this is your case, keep an eye out for the web-based portal to update direct deposit information.
If you’d still qualify for a stimulus check and haven’t filed your 2019 tax return yet, you may be able to update your direct deposit information by doing so.
Don’t forget to factor in the other consequences of filing a 2019 tax return before you do. A tax professional can help.
Will My Stimulus Check Be Taxable?
One big question is whether the stimulus check will be taxable.
You don’t have to pay taxes on it.
The stimulus check is set up in a unique way that allows this to happen. It is essentially a refundable tax credit for the 2020 tax year.
Tax credits aren’t considered income, so you don’t have to pay taxes on it.
Will I Have to Repay My Stimulus Tax Credit?
What happens if you qualify for a stimulus check based on your 2018 or 2019 tax return but you make too much money in 2020? Will you have to repay your stimulus check amount?
Thankfully, the answer is no.
The stimulus check won’t be clawed back or have to be repaid according to the Tax Foundation.
Will My Stimulus Check Impact My Tax Refund Next Year?
The stimulus check tax credit is being refunded to you in advance.
This has made people worry that their tax refunds will be lower next year. That shouldn’t be the case.
This tax credit reduces the amount of tax you’ll owe next year.
You’re getting paid the amount in advance. This basically means it will have no impact on your tax refund situation for next year.
In rare cases:
If you didn’t qualify for a stimulus check due to higher AGI in 2018 or 2019, you actually may get a bigger refund in 2020.
That’s because these people can claim the tax credit they should have received now on their 2020 tax return.
Even with all of this said, your tax refund could be dramatically different next year.
If you’ve lost your job, gotten a raise, changed your withholding or changed your tax situation in any other way, your refund could be impacted.
However, it won’t be due to the stimulus check tax credit.