Updated to include that dependents over 16 will not get a check.
Last week President Trump signed into law the historic $2,000,000,000,000 stimulus package. Included in this law is the economic impact payments that many adults in the United States will receive. The Internal Revenue Services (IRS) has a page detailing just how they plan to distribute these checks to people. Be warned, the information on that page has had information updated once already. I would expect it will be updated further as the Treasury Department and IRS provide more guidance on the stimulus checks. In this post, I will highlight some key takeaways about the economic impact payments.
Who will get the check
Anyone who filed an individual income tax return for tax year 2018 or tax year 2019 may be getting a stimulus check, provided they meet the income requirements. Realistically there are three categories of people who will get the checks: individual adults, individuals who filed head of household, and married adults who filed jointly.
It should be noted that dependents over the age of 16 will not get stimulus checks. This is likely to impact college students the most.
The check for individual filers can be up to $1,200 plus $500 per qualifying dependent under the age of 17. Individuals filers who have an adjusted gross income (AGI) up to $75,000 are eligible to receive the whole amount. AGI amounts above $75,000 will have their refund check reduced. $99,000 is the upper limit for individuals to receive any stimulus check.
The check for head of household filers can be up to $1,200 plus $500 per qualifying dependent under the age of 17. Head of household filers who have an adjusted gross income (AGI) up to $112,500 are eligible to receive the whole amount. AGI amounts above $112,500 will have their refund check reduced. $136,500 is the upper limit for head of household filers to receive any stimulus check.
The check for married couples filing joint can be up to $2,400 plus $500 per qualifying dependent under the age of 17. Married couples filing joint who have an adjusted gross income (AGI) up to $150,000 are eligible to receive the whole amount. AGI amounts above $150,000 will have their refund check reduced. $198,000 is the upper limit for married couples filing joint to receive any stimulus check.
The above AGI’s come from the 2019 return. Or if a 2019 return was not filed, the AGI will come from the 2018 return. The same is true to determine qualifying dependents under the age of 17.
Social Security recipients and railroad retirees
Initially, the IRS had said that only tax filers would get the stimulus check. Many Social Security (SS) recipients and railroad retirees (RR) don’t have a filing requirement. That would have meant to get the stimulus check, that SS and RR individuals would have had to file an unnecessary return to receive their payment.
After a bit of push back from retirees, the Treasury Department reversed that decision. Those who only receive SS or RR benefits will now receive a check. The retirees SSA-1099 or Form RRB-1099 will be utilized to generate those checks.
It should be noted that the IRS won’t know about any dependents for any individuals that didn’t file a tax return in 2018 or 2019. That means any SS or RR recipients that have a dependent may want to file a tax return to get the extra $500 per qualifying child under age 17.
Where will the IRS send the check?
The IRS will use the direct deposit information on the 2019 tax return for the stimulus check. If there is no 2019 return, the IRS will use the 2018 direct deposit information. SS & RR recipients will utilize the direct deposit information on hand for those payments.
However, not everyone has direct deposit information on their tax return. This is true for many tax filers who end up owing money. To accommodate those people, the IRS will soon launch a web portal to allow taxpayers to provide direct deposit payments for this check.
It would be wise for anyone that wants this check promptly to give the IRS direct deposit information when the web portal is launched. The IRS can only process about 5 million paper checks a week. Direct deposit stimulus checks will be coming as soon as the Treasury Department released the money. Paper checks will go out in order of the lowest AGI to the highest AGI. That means anyone waiting for a paper check may be waiting weeks for their stimulus. That is especially true for those at the upper ends of the AGI limits.
More information coming in future posts
There are still a lot of unanswered questions about the economic impact payments. In the coming weeks, we will publish more information as the IRS and Treasury Department clarifies it. Also, you can contact us with any questions you may have.