The economic turmoil caused by the coronavirus has been substantial, especially for small businesses. Many people have found themselves out of the job, which has put undue financial stress on many American households. In response to the economic impact of the coronavirus outbreak, U.S. lawmakers recently passed an economic relief bill to support the public through the crisis. The $2 trillion dollar stimulus package includes provisions that will put money directly into the hands of millions of American taxpayers. Coronavirus direct payments are going out to a lot of people, so stay tuned to see if you qualify.
Who Qualifies for Coronavirus Direct Payments?
Most households will qualify for coronavirus stimulus checks. In order to qualify, you must have a social security number and you can’t be claimed as a dependent. There are income requirements, and taxpayers who exceed will not receive the full total. The IRS is basing payment eligibility on the most recent tax return going back as far as 2018. If you haven’t filed for 2019 yet, the IRS will use your 2018 tax return to determine your eligibility.
Each qualifying adult is eligible to receive $1,200. Those with children can expect an additional $500 per child under 17. The IRS says that direct payments for coronavirus could begin to take place as early as April 9. Those who have their direct deposit information on file with the IRS will get their payment sooner than those who do not. If you did not receive a tax refund in the form of a direct deposit, you can expect to receive a paper check, however, the turnaround time or paper checks could be significantly longer.
As we mentioned above, there are income restrictions in place. How much you receive will depend on how you file your taxes and how much your taxable income is. You still qualify for a check if your income is above the threshold, however, you won’t qualify for the full amount. For every $100 you earn over the limit, the government will deduct $5 from the total of your stimulus check. At a certain point, you won’t receive anything.
- Single filers with a taxable income of $75,000 or less will receive the full amount. If you earn more than $99,000 per year, you won’t receive a payment.
- Taxpayers filing as head of household whose taxable income is less than $112,000 are eligible for the full amount.
- Married couples who file joint returns who earn a combined taxable income of $150,000 or less will also get the full amount. Couples who earn more $198,00 per year will not qualify for payment.
Talks about direct payments for coronavirus have been taking place for the last several weeks. There has been a lot of conflicting information being shared on the internet, as well as a lot of changes. This is leaving many people with a lot of questions.
Do I Have to Apply?
You do not have to apply to get a stimulus check, however, the IRS is using information based on 2018 or 2019 tax returns to submit payment. If you haven’t filed a tax return in 2018 or 2019, now is a good time to do so if you want to receive a check.
How Will I Get My Money?
The IRS will issue funds via direct deposits for taxpayers with their bank information on file on their most recent tax return. If no banking information is available, the IRS will send a check to the address that is on file. It could take up to 5 months to receive a check, so the IRS is working on a web-based system where recipients can input their banking information for direct deposit. However, the system isn’t operational just yet so stay tuned.
Do College Students Qualify?
Most college students may not qualify for a stimulus check. The reason being is that college students ages 18-24 can still be claimed by their parents as a dependent. In order to qualify for a check, you cannot be claimed as a dependent by anyone else. In addition, because the student is over 18, the parents are not eligible to receive the additional $500. This also applies to other adult dependents. For example, an elderly or disabled adult as a dependent, there is no additional payment for them.
Do I Get More for Having Kids?
You are eligible to receive an additional $500 per child who is under the age of 17.
Will I Still Get Paid if My Tax Refunds are Being Garnished for Defaulted Student Loans?
If the IRS has seized your tax return over the past few years to cover defaulted student loans, don’t worry. You’re not alone. Student loan debt hanging over the heads of many Americans. Fortunately, you’ll still receive a stimulus check and the IRS will give you a free pass on the garnishment this time around.
Will Veterans and SSI Disability Recipients Receive Payments?
Originally, the government said that certain people who don’t typically file taxes would need to file a simple tax return to receive the cash payments. However, officials reversed that decision in early April. Treasure Secretary Steve Mnuchin sais the IRS will use Social Security data to generate payments to recipients who didn’t file tax returns. Veterans who receive VA disability benefits will be treated the same as Social Security recipients, so the will also receive direct payments.
Get Answers to All of Your Tax Questions
The tax experts at Shared Economy Tax can help you make sense of the uncertainties caused by the coronavirus outbreak. Tax planning is more important than ever during times of crisis, as it will be instrumental to your business’s eventual financial recovery. Get started today with a free one-on-one strategy session to discuss COVID-19 tax planning or to learn more about coronavirus direct payments. You can also sign up for our free newsletter using the form below for the latest small business resources and coronavirus tax updates.