By Julie Jason, originally posted on Forbes.com:
[April 2, 2020 UPDATE for Social Security recipients: On April 1, 2020, the Treasury issued a release reversing its position on Social Security recipients who did not file tax returns in 2018 or 2019. No tax return filing will be required for these individuals to receive their Economic Impact Payments; the Treasury will use Social Security information to make payments automatically either by paper check or by direct deposit, depending on how Social Security benefits are currently paid to the recipient.]
Your CARES Act check is automatic, right? Not so fast, you may need to act.
When the CARES Act (H.R. 748, the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES” Act) was signed into law by President Trump on March 27, 2020, “economic impact payments” were part of the deal.
The IRS issued a statement today to explain the mechanics.
In most cases, you do not need to do anything to get your check. The IRS working together with the Treasury Department has this all under control. They will use information from your tax returns to either mail a check to you, or if your tax returns provide electronic payment information, you will receive a deposit from the Treasury in your bank account.
Deposits will occur and checks will be mailed beginning over the next three weeks, according to an IRS release.
Action needed: Direct deposit information
If you want to provide the IRS your direct deposit information, you will be able to do so, as soon as the Treasury releases information on a web-based portal that it is setting up for this purpose. With direct deposit information, you will receive your deposit “immediately” instead of through the mail.
Action needed: File a tax return
If you have not filed a tax return since 2018, according to the IRS release, you should. At IRS.gov/coronavirus, the IRS will “soon” post instructions on how to file a 2019 tax return with “simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.” This method is for people who aren’t required to pay taxes and file a return because they fall under income thresholds, such as low-income taxpayers. As to timing, you have until the end of the year to do this, according to the release, but of course, it makes sense to act soon.
In the alternative, you can file a 2019 return now by using the IRS Free File program.
Filing a return is the best way to receive a recovery, according to “CARES Act: Recovery Check FAQ” (March 26, 2020).
Action needed: Check to see if you are eligible
If your adjusted gross income (AGI) is up to $75,000 (individuals; $150,000 for married couples filing joint returns), you will receive the full payment (see below).
If you make more, the payment is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
If your AGI is more than $99,000 (single filers) or $198,000 (joint filers with no children), you won’t be getting a dime.
Action needed: Check to see how much you will receive if eligible
You will receive up to $1,200 ($2,400 for married couples). Parents will receive $500 for each “qualifying child.” That’s a dependent under the age of 17, according to “CARES Act: Recovery Check FAQ.” (March 26, 2020)
A family of four (two parents and two children) would receive $3,400.
Action needed: Keep up with current information
In the interest of speeding these funds to people, information is coming out to the public as it is developed. You need to be on the lookout for updates at IRS.gov/coronavirus instead of calling the IRS.
If you would like to read the Act itself, you will find it here.
If you would like to read the full IRS release, “Economic impact payments: What you need to know,” you can find it here.
I have posted the following additional resources on my website:
- "Relief for Businesses in the COVID-19 CARES Act" (Day Pitney LLP)
- "Resources for Businesses Adversely Impacted by COVID-19" (Stamford Office of Economic Development)
- "Links and Resources from the Coronavirus Relief Bill" (Congressman Devin Nunes)
- "What You Should Know About the CARES Act" (Congressman Jim Himes)
- "Q&A: How a New Federal Law Aids the Economy" (Wells Fargo)
- "SBA Disaster Assistance in Response to the Coronavirus" (Small Business Administration)
- "Small Business Administration Paycheck Protection Program" (Small Business Administration)”
- "The CARES Act: What Employers Need to Know" (Epstein, Becker & Green)
- "Economic impact payments: What you need to know" (IRS)
- "SBA and Treasury Begin Unprecedented Public-Private Mobilization Effort to Distribute Funds"
- "COVID-19 Economic Injury Disaster Loan Application" (Small Business Administration)
To read Julie Jason's books, go to: https://juliejason.com/books/julies-books.