Coronavirus and Taxes - Part 7

Stimulus Payment Update

May 9, 2020

BACKGROUND INFORMATION:  The federal government has been sending out the stimulus checks to people who qualify to receive the payment.  As I stated previously these checks will be sent to you based upon your 2018 tax return if you have not yet filed your 2019 tax return.  If you are single and your ADJUSTED GROSS INCOME is under $75,000 you will receive at $1,200 stimulus payment.  If you are married and your ADJUSTED GROSS INCOME is under $150,000 you will receive $2,400.  If you have a dependent child under age 17 you will receive an additional $500 for each qualifying child.  If your income is above the aforementioned limits your stimulus payment will be reduced $5 for every $100 above the limit until your income reaches $99,000 for a single taxpayer or $198,000 for a married taxpayer where you would not qualify for a stimulus check.

The payments are being made based upon banking information you have on file with the IRS.  When you filed your 2018 or 2019 tax return and you got a refund and provided banking information for a direct deposited, the IRS will use that information to process your stimulus payment.  If you do not have banking information on file, you will receive a check.  If you want to give the IRS your banking information, please see below for more information.

WHEN DO I GET MY CHECK:  There is a schedule as to when you can expect your check.  First, if you are getting your stimulus payment via direct deposit you should have received it by April 17, 2020.  If you are getting a check, it is based upon your ADJUSTED GROSS INCOME.  The following is the schedule as to when you should expect your payment.  All other checks (for those without tax information on file) are schedule for payment by September 11.

HOW DO I GET MY STIMULUS PAYMENT BY DIRECT DEPOSIT:  If the IRS does not have your banking information on file you can still receive it via direct deposit but you now must act quickly.  The IRS announced on May 8 that the last day you can give the IRS your banking information will be noon Wednesday May 13.  If you don’t provide your banking information you will receive a check according to the schedule listed above.

To provide the IRS your banking information you need to go the IRS website and click on the Get My Payment tab.  When you click on the tab you will need to have your most recent filed tax return to provide certain information   The IRS will verify your identity with certain information from your tax return.  After validating your identity, you will then be able to provide your banking information for your stimulus payment.  Direct deposit will speed up the receipt of your payment.

RETURNING A STIMULUS PAYMENT:  If you received a stimulus payment in error it is not yours to keep.  The government wants it back.   In newly released guidance, the IRS confirmed that some stimulus payments were sent by mistake to nonresident aliens, incarcerated people, and deceased taxpayers. It's now asking those recipients, or their family members, to return the money.

As for married filing jointly taxpayers, money was automatically sent to the bank account or address on the joint tax return without being cross-checked against other records to confirm whether both spouses are still living.  The IRS says that the living spouse is entitled to keep their portion of the stimulus payment — which would be half of the total amount.  The same goes for spouses of people in prison who may have received the full payment permitted for joint filers.

While the IRS wants the money back, they have not outlined any consequences for not returning a stimulus check it sent by mistake.  There's a good chance some people who got stimulus checks in error may have already spent the cash.

The newly released guidance says you "should" return the money "immediately," but there's no official mandate.  The CARES Act has no claw back provision allowing the IRS to take back money it has already disbursed during the coronavirus national emergency.

If you received an erroneous paper check, here's what to do:

1. Write "void" in the endorsement section on the back of the check.

2. Write a note to include with the check explaining why it's being returned.

3. Mail the check and the note to the IRS location based on the state you live in. The list of addresses is available on the IRS website.

If you got a direct deposit, or you already cashed the paper check you received, here's what to do:

1. Submit a personal check or money order payable to "U.S. Treasury" and write "2020EIP" along with the recipient's and send to the IRS address corresponding to your state.  The list of addresses is available on the IRS website.

2. Indicate your Social Security number or individual taxpayer identification (TIN) number.

3. Write a note to include with the check explaining why it's being returned.

Lastly, I hope that you and your family are well and are remaining safe.  As I previously stated in other emails, in trying to keep in compliance with social distancing guidelines, I am offering to pick up your tax documents and discuss your tax situation either over the phone or via Zoom or Skype.  You can also scan your documents into a PDF and email to me.  Also, they can be mailed to my P O Box.

As more information becomes known I will keep everyone informed.  Feel free to reach out to me to discuss your situation.  Be safe everyone.

Harry E. Hunter

President

Hunter Consulting, Inc.

May 9, 2020