C-19 Stimulus Checks … Got Yours? Waiting? Questions?

June 2020

ALERT: THIS IS NOT JUNK MAIL!

You know that most Americans qualify for a one-time tax-free Economic Impact Payment of $1,200 for individuals, $2,400 for couples, plus $500 for each qualifying child. Until now, those payments were delivered via paper check. Now a new development … nearly 4 million people are being sent their payment by prepaid debit card. That has caused a bit of confusion. Expecting a check as payment, some have cut it up thinking it wasn’t legitimate, while others have reported it as a scam.

If you are a recipient, your debit card will arrive in a plain white envelope from “Money Network Cardholder Services” with a return address from Omaha, Nebraska. Please don’t think it’s junk mail and discard.

Your prepaid debit card is free of fees and may be used for the following transactions:

• Make purchases online and at any retail location where Visa is accepted
• Get cash from in-network ATMs
• Transfer funds to your personal bank account
• Check your card balance online, by mobile app or by phone
• Enjoy consumer protections available to traditional bank account owners, including protection against fraud, loss and other errors.

Note: There is some speculation that the debit card approach is a signal as to how a Round 2 of stimulus payments may be processed, if Congress were to approve that added support.

Please go to EIPcard.com for more information.

Better Yet!
Blair + Assoc stand ready to help as needed. A phone call or email is all it takes.
We’ll respond promptly.

The Economic Impact Payment is a federal response to provide immediate financial assistance to households in the wake of the coronavirus pandemic. Here’s a rundown on the key features.

A Brief Recap

Rebates will only be issued to individuals with valid Social Security numbers. The Social Security provision applies to qualifying children as well.

Qualification for the rebate and the amount to be paid is based upon an individual’s 2019 return. If no
2019 return has been filed, the rebate will be determined based upon an individual’s 2018 return.
Most Americans will qualify with limitations for households that have income above specified thresholds.

The rebate is reduced by 5 percent of an individual’s adjusted gross income (AGI) in excess of:

• Single Individuals: $75,000
• Married Filing Jointly: $150,000
• Head of Household: $112,500
• Others: $75,000

There are no rebate/stimulus payments once AGI equals or exceeds:

• Single Individuals: $99,000
• Married Filing Jointly: $198,000*
• Head of Household: $136,500*
• Others: $99,000*
*Add $10,000 for each qualifying child under age 17.

Still Waiting for Yours?

Do you meet the requirements for a stimulus payment, but you're still waiting on your check or prepaid debit card from the IRS? The IRS has been sending Individual Direct Financial Subsidy (C-19) payments since April to over 150 million Americans. If you’re not yet one of the recipients and qualify based on the above, one or more of the following eight reasons may explain why your payment hasn’t arrived.

But as a first step, be sure to check the IRS Get My Payment portal to see if you can locate the status of your financial subsidy.

1. The IRS has scheduled your payment for later in the year: The IRS estimates it could take up to 20 weeks to send every payment. Prioritized payments begin with lowest incomes, so depending on your adjusted gross income, you may have weeks or even several months to wait.
2. The IRS started processing your paper check before you submitted your direct deposit information: The deadline to sign up for direct deposit was May 13. If you missed that date, expect a check or prepaid debit card via mail.
3. Your bank had trouble processing the direct deposit: In this case, the payment was returned, and the IRS has or will mail your check to the most current address it has on file.
4. The banking information the IRS has for you is out of date or no longer valid: The agency will mail you your check or prepaid debit card. Again, check the IRS Get My Payment tool for updates.
5. You owe child support: You’ll receive a notice from the Bureau of Fiscal Service stating that your payment may be reduced or eliminated.
6. A claimed dependent is not eligible for a payment: Parents not married to each other and who don’t file a joint return cannot both claim a qualifying child as a dependent. College students don’t qualify as dependents.
7. You may have been scammed: You may receive a letter from the IRS notifying you that the agency has sent your money and what do if your payment did not arrive
8. You need to file a non-filers form: If you are eligible for a payment and your income level did not require you to file a tax return for 2018 or 2019, go to the IRS website. Click on the button for non-filers and enter your information to initiate the process to get your stimulus check.

And Now for Some Questions

If you’re like most taxpayers, your questions and concerns focus on taxability of the rebates and rules often enforced/interpreted with a degree of leniency to the benefit of taxpayers. Here are several real-life examples presented to Blair + Assoc.

Couple’s 2019 AGI Exceeds $150,000: This married couple filed their 2018 joint return reporting $145,000 in AGI. In 2019, their AGI was above the $150,000 threshold … so they’ve held off filing their 2019 return.

Meanwhile, as expected, their $2,400 stimulus check arrives. What to do? Answer: They should of course file their 2019 return by the extended deadline … July 15, 2020. And, no, they are not required to refund the $2,400 even though their income surpassed the qualifying limit of $150,000. Lenient … yes!

Couple Has a Child Born in 2019: This couple has not filed their return for tax year 2019. Their stimulus check was calculated based on their 2018 return … $2,400 which has been received. While they have not yet filed their 2019 return, they welcomed their new child to the world this year. Good news! That means they qualify for $500 for their qualifying child … to be collected when they file their 2020 return next spring.

Stimulus Check Received in Error: The IRS continues to release additional guidance related to the CARES Act provisions as questions arise pertaining to the coronavirus pandemic. Changes in rules and/or their interpretation by the IRS happened between 2018 and 2019. That has resulted in the issuance of stimulus checks in error. If you believe your stimulus check was received in error, your answer will likely be addressed at this link, the Economic Impact Payment Information Center.

Note: Many taxpayers have asked whether the rebates are really
“advances” on 2020 taxes which must be repaid next year. They are not!

Tax Refund in 2020 – Effect on My 2019 Stimulus Check: A married couple filing jointly received their $2,400 stimulus check this year. Their question … “what happens if I get a $400 refund when I file our 2020 return … do I owe the IRS $2,000, the difference between the stimulus check and my $400 refund?”

The answer is no. You will still receive the $400. The stimulus check amount received will be disregarded. You can only get additional amounts. No amounts previously paid will be reclaimed.

So, you get the picture. There are many questions … more and more answered and more yet to be. Please re-visit the items above in the Still Waiting for Yours? section of this article for additional scenarios that can affect your economic impact payment being different than anticipated. If you want to mount a do-it-yourself effort for updated info from the IRS visit the Economic Impact Payment Information Center.

Better Yet!
Blair + Assoc stand ready to help as needed. A phone call or email is all it takes.
We’ll respond promptly.