U.S. President Donald Trump signs H.R. 748, the CARES Act in the Oval Office of the White House on March 27, 2020 in Washington, DC.
Erin Schaff | Getty Images
The $2 trillion coronavirus stimulus bill, signed into law on March 27, is the largest emergency aid package in U.S. history. Known as the CARES Act, it will send money directly to tens of millions of Americans affected by the coronavirus. Of the hundreds of questions we received about this new legislation, the biggest concern is just who is eligible for this relief payment. I spoke with several financial advisors to get answers to your questions.
If you haven’t filed taxes yet for 2018, will you still receive a check because of the coronavirus?
You should file a tax return as soon as possible. The IRS will use information on your 2018 or 2019 tax return to determine whether you are entitled to an “economic income payment” and the amount you should receive. If you didn’t file a tax return for 2019, the agency will use your 2018 return.
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. Parents also receive $500 for each qualifying child.
Individual tax filers with adjusted gross income up to $75,000 (up to $150,000 for married couples filing joint returns) will receive the full payment. For filers with income above those amounts, the payment amount is reduced and then phased out for individuals whose income exceeds $99,000 (or $198,000 for joint filers with no children).
“Anyone who has not filed either return should file a return for 2019 as soon as possible, even if they owe no taxes,” said tax policy expert Richard Winchester, a visiting professor at Seton Hall University School of Law. “That will prevent them from being overlooked for these payments.” Also, make sure to include direct-deposit banking information on your return so the IRS knows where to send the check.
Anyone who has not filed … should file a return for 2019 as soon as possible, even if they owe no taxes. That will prevent them from being overlooked for these payments.
tax policy expert and visiting professor at Seton Hall University School of Law
There are several ways to file your tax return for free. Taxpayers with incomes below $69,000 can file the IRS’ Free File software to do their federal returns. If your income is above $69,000, fillable forms are available for free on the IRS website. Online tax preparer TurboTax is also offering its basic tax-prep service for free until April 4, allowing you to connect with a CPA or enrolled agent via video chat who will review your tax return line by line.
We have an adjusted gross income of $155,000 for 2018 and we filed a “married filing joint” return. Does that mean we’re not getting any stimulus money?
You and your spouse should still be eligible to receive a stimulus check based on your 2018 income. It won’t be the full payment, but a reduced amount.
To receive the full $2,400 payment, married couples who filed a joint return must have had an adjusted gross income in 2018 (or 2019) that is less than $150,000. If your income was higher, the payment amount will be reduced by $5 for every $100 above the $150,000 threshold, according to the IRS. Based on your $155,000 income in 2018, your payment would be reduced by $250. Therefore, you should receive a payment of $2,150.
If your 2019 income was below the threshold, tax advisors suggest filing your return as soon as possible to qualify for the full payment. “The IRS wants the most up-to-date information about your adjusted gross income. That’s why you should file your 2019 taxes, which is what they will use to determine your stimulus check,” said Lisa Greene-Lewis, a CPA and tax expert at TurboTax.
Even if your 2019 income was higher than 2018, don’t delay in filing your return, she says. “You may be eligible for a refund once you go through all of the credits and deductions that you qualify for. Last tax season about 72% of taxpayers received a refund worth about $3,000. That’s a lot of money that people could use right now.”
Will the check be made out to my husband or me, or will each of us receive one made out to us individually?
The IRS sends out tax refund checks based on how you filed your taxes and will likely use the same procedure for stimulus payments. “If you file ‘married filing jointly,’ the check will be sent to both of you. Both of your names will be on the check,” Greene-Lewis said. “If you file ‘married filing separately’ and file two separate returns, you’d receive two separate checks made out in each of your names.”
Will people on Social Security or disability be receiving a check for the stimulus package? If so, do you know how much they will receive?
If you receive Social Security benefits for retirement, disability or Supplemental Security Income, you are eligible to receive a stimulus check as long as you do not exceed the income limits. “If someone did not file a return for 2018 or 2019, they could still receive a check if they received Social Security retirement or disability benefits in 2019,” Winchester said. “The same income limitations will apply to determine whether they receive a check and the amount they will get.”
Individuals with adjusted gross income below $75,000 would receive the full $1,200 payment. But stimulus checks will be reduced by $5 for every $100 above that threshold. If your income is above $99,000, you’re not eligible for a payment.
For Social Security recipients who weren’t required to file a 2018 or 2019 tax return, Greene-Lewis said “the IRS will go by Form SSA-1099, which is what the Social Security Administration sends out to you and the IRS” to document your Social Security income. “But it is still good to have updated information regarding where you want the check deposited,” she said. “If you’re on Social Security, the IRS will send the payment to the same place that your Social Security check is sent.”
Also, the IRS says “in coming weeks” the Treasury department plans to develop a web-based portal for individuals to provide their banking information to the IRS online so you can receive payments immediately to an account instead of checks in the mail.
Will a person who owes back taxes receive any money?
If you meet the income guidelines, tax experts say the IRS will still issue a stimulus payment even if you owe back taxes. The only exception to this is if you owe child support payments. “They waived offsets, like federal and state taxes not paid or student loans not paid,” Greene-Lewis said. “They waived offsets in any situation except unpaid child support.”
Can I not accept the money the government wants to give me so I don’t have to pay it back later?
As of right now, there is no way to “opt out” of receiving a payment if you qualify. “Payments will be automatically made to every eligible person. If you accepted a tax refund by direct deposit, the government will send the funds directly to you the same way,” Winchester said. “This payment is not taxable income. Instead, it is an advance refund on the taxes you will owe for 2020. 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.”
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