fbpx
  1. Home »
  2. Current Events

Stimulus Check Fact Breakdown: What to Know

Updated: August 2, 2020

One-time stimulus payments were approved by Congress on March 25th, 2020, as part of a multi-pronged relief package1 to ease the economic impacts of the coronavirus pandemic. The $2.2 trillion CARES Act (Coronavirus Aid, Relief and Economic Security Act) grants $1,200 to most single individuals and $2,400 to most married joint filers, as well as an extra $500 per eligible child.

There are some stipulations — not everyone is eligible, and some will receive smaller payouts. We’ll cover in detail who will receive money, when payments will be sent, and a few other vital pieces of information.

Economic Impacts Payment Facts

Am I Eligible for a Stimulus Check?

Payments are structured in tiers depending on income, but before you find out how much you’re getting, the following is first required of individuals to qualify for any amount of disbursement2:

  • Must be a United States resident
  • Must have a work-eligible social security number
  • 2018 or 2019 taxes must be filed

If you weren’t required to file taxes for 2018 or 2019 and you qualify in all other areas, you can still receive a payment — we’ll tell you how to get it electronically in a moment. If you’re a US resident with a work-eligible social security number and you have not filed your 2018 or 2019 taxes, you’ll need to file for either year to receive your stimulus payment2.

How Much Will I Receive?

According to the IRS, taxpayers will receive the full $1,200 (or $2,400 for married joint filers) in accordance with the following as long as they are not dependents of another taxpayer and have an AGI (adjusted gross income) of up to:

  • $75,000 (individuals)
  • $112,500 (head of household)
  • $150,000 (married filing jointly)

Reduced payments will be sent to individuals with AGIs between:

  • $75,000 and $99,000 (individuals)
  • $112,500 and $136,500 (head of household)
  • $150,000 and $198,000 (married filing jointly)

It’s important to quickly explain adjusted gross income, which is not gross income. Your gross income is the cumulative income you receive in a given year, but special adjustments like interest on student loans or alimony payments would lower your gross income and generate a new total, called your adjusted gross income3 — which the amount of your stimulus payment will be based upon. To find your AGI, locate line 7 on your previous tax returns.

If your income falls into the reduced payment category, you can calculate exactly how much you’re owed. For those whose incomes still qualify but reach above the $75,000/$112,500/$150,000 thresholds, payments decrease as follows:

  • $5 for every additional $100 of earned income (or equally, but perhaps less confusingly, $50 per $1,000 of additional earned income) until the amount drops to zero at $99,000/year (for individuals)

If you’re a single taxpayer who makes $76,000 annually, your payment would drop from $1,200 to $1,150. If you make $80,000 annually, you would receive $950. Use the following table to help estimate your payment, or use Turbo Tax’s helpful stimulus payment calculator.

Individuals

Married (Filing Jointly)

Head of Household

Income Payout Income Payout Income Payout
$75,000 $1,200 $150,000 $2,400 $112,500 $1,200
$77,500 $1,075 $155,000 $2,150 $115,000 $1,075
$80,000 $950 $160,000 $1,900 $117,500 $950
$82,500 $825 $165,000 $1,650 $120,000 $825
$85,000 $700 $170,000 $1,400 $122,500 $700
$87,500 $575 $175,000 $1,150 $125,000 $575
$90,000 $450 $180,000 $900 $127,500 $450
$92,500 $325 $185,000 $650 $130,000 $325
$95,000 $200 $190,000 $400 $132,500 $200
$97,500 $75 $195,000 $150 $135,000 $75
$99,000 + $0 $198,000 + $0 $136,500 + $0


What if I Have Children?

Taxpayers with child dependents will receive an additional $500 per qualifying child. Children must be 16 or younger in order for parents to receive the funds.

Who is Ineligible?

  • High-income taxpayers with annual pay exceeding the above threshold;
  • Non-resident aliens;
  • Those that have not and will not file 2018 or 2019 taxes if they were required to do so;
  • Those without a social security number; and
  • Individuals that will be claimed as dependents, such as children, some retirees, and some college students.

When Will I Get My Stimulus Payment?

Payment disbursements timelines range from a few factors, including income level and method of payment. Many taxpayers started to receive their payments as early as Saturday, April 11th. 

The first wave of payments will hit the bank accounts of approximately 80 million Americans before Thursday, April 16th. These payouts go to people that filed their 2018 or 2019 taxes and authorized the IRS to make a direct deposit to their bank account if they were due a refund. In this case, there’s nothing that needs to be done — the payments will automatically flow through to the bank account that was previously used to accept tax refunds. Social security recipients will also receive automatic payments, even if they haven’t filed.

Still, this leaves hundreds of millions of taxpayers waiting for a payment. When will they receive it?

If you require a paper check, your disbursement may take weeks — or even months — to arrive, as processing paper checks is labor and time-intensive. The check payments are being prioritized by income, but now there’s a way for taxpayers to potentially get payments much faster.

The IRS just released a tracking and payment attainment tool called Get My Payment. This allows those who have filed 2018 or 2019 returns to enter their bank info so that they may receive electronic payments as well as track disbursement estimations. Those that were not required to file 2018 or 2019 payments can also enter their bank info on the IRS’s secure website so that they may accept their payment electronically. It should be noted that deposit account information cannot be updated after the payment has been scheduled for delivery.

Are These Payments Taxable?

A question on everyone’s minds is if these payouts will be subtracted from 2020 tax returns or count as 2020 income for next year’s filing.

The answer for both is no4.

The stimulus money will not count as taxable income. It’s free money and will not ding you on your 2020 filing. Moreover, your taxes will not be higher next year because of anything to do with the stimulus money.

What if My Income is Different in 2018 and 2019?

Let’s say your AGI in 2018 was $60,000, which would qualify you for a $1,200 payment. But what if you made $100,000 in 2019?

If you filed your 2019 taxes already, you won’t see a stimulus payment. But if you haven’t filed your 2019 taxes and a stimulus check (based on your 2018 taxes) arrives, don’t worry — you won’t have to pay it back.

Similarly, if you made $75,000 in 2018 and $80,000 in 2019 but have not yet filed your 2019 taxes, you will not owe the $250 difference to the government this year, next year, or ever.

Video

 

Sources

  1. https://www.npr.org/2020/03/24/820759545/read-2-trillion-coronavirus-relief-bill?live=1
  2. https://www.irs.gov/coronavirus/economic-impact-payment-information-center
  3. https://www.irs.gov/e-file-providers/definition-of-adjusted-gross-income
  4. https://www.forbes.com/sites/advisor/2020/04/06/dont-worry-the-1200-stimulus-payment-wont-cut-into-your-tax-refund-next-april/#271a29d5ea8b

Leave a Comment