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Everything You Need to Know About the Stimulus Payments

Taxes

Last updated: April 15, 2020

Father and daughter looking at a computer

Now available: TaxAct’s Stimulus Registration

If you aren’t required to file a tax return and do not receive social security benefits, you can register for your stimulus payment with our Stimulus Registration. Get registered.

Note: If you are required to file your tax return, you do not need to register through the Stimulus Registration.

It’s official. The largest emergency aid relief in U.S. history was just signed into law to address the economic impact of the Coronavirus. Named the CARES Act, this monumental $2 trillion stimulus package is intended to provide relief to individuals, businesses, and industries who have taken a financial hit over the last several weeks.

Of course, the star of the stimulus package is the $250 billion designated for direct payments to Americans.

Yeah, you read that right.  You are probably getting a check.

To help you better understand the stimulus payments and determine if you qualify, we’re here to answer the most common questions.

Note: The stimulus payments have recently been named the Economic Impact Payments (EIP). If you see that named referenced, understand that is the stimulus payment.

Who qualifies for the stimulus money and how much is the payment?

The short answer – most everyone will qualify for some amount of money. You must have a Social Security number and not be a dependent of someone else. Here are the specifics:

  • Individuals (aka Single filing status) who have an adjusted gross income (AGI) of $75,000 or less are eligible to receive the full payment amount, which is $1,200. That payment reduces by $5 for every $100 in income above $75,000. Reduced payments will go out to individuals who earn up to $99,000 a year. If you earn more than $99,000, you will not receive a payment.
  • Married couples with an AGI of $150,000 or less are eligible to receive a full payment amount of $2,400. That payment also reduces by $5 for every $100 over the $150,000 mark for couples who earn up to $198,000. Those who have an AGI that’s more than $198,000 are not eligible to receive a payment.
  • Head of Household filers who have an AGI of up to $112,500 are eligible to receive a $1,200 payment. Reduced payments will be sent to Head of Household filers with an AGI of up to $136,500. Those who earn more than $136,500 are not eligible to receive a payment.

Check line 8b on your 2019 1040 federal tax return to find your AGI. If you haven’t filed your 2019 return yet and need to refer to your 2018 AGI, check line 7 on Form 1040.

But what if I have children?

Good news! If you have children under the age of 17, you may qualify to receive an extra $500 for each one.

Unfortunately, that means if your child is over the age of 17 you will not qualify for extra money.

My child is in college, do I get anything extra?

Unfortunately, no. To qualify for the extra $500 your child must be younger than age 17.

And to answer your next question – no, your high school or college student who is 17 or older cannot file their own tax return to receive a stimulus payment if they qualify to be claimed as a dependent on your return. That’s true even if you choose not to claim them. If they pass the dependent test, they are always considered a dependent.

That said, this is one of the more confusing areas of the bill. We anticipate the Treasury will release further guidance.

What about people who are on Social Security or who don’t earn an income?

If you are on Social Security, you still qualify to receive a stimulus payment as long as your total income does not exceed the income thresholds. That said, if you have a dependent, the IRS will not have a record of that information. Therefore, your payment will likely not include the additional $500 for the dependent(s).

Important: On April 1, 2020, the Treasury Department announced individuals on Social Security DO NOT need to file a tax return to receive their stimulus payments. The IRS will refer to Form SSA-1099 and Form RRB-1099 to generate the payment. Recipients will receive the money via direct deposit or by check, like they normally receive their benefits. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return. See the official information at the IRS website. And read the Treasury News Release on the topic.

If you are not on Social Security but also do not earn an income, you are required to file a return to get your stimulus payment. Use TaxAct’s Stimulus Registration to get registered.

How do I get the payment? Do I need to do anything?

Most people do not need to worry about doing anything. If you already filed your 2019 tax return, the federal government has the most up-to-date information needed to accurately assess how much your payment should be and send it to you. The payments will come automatically. 

If you haven’t completed your 2019 return, we recommend filing as soon as you can so you receive the most accurate payment. Filing now also helps to ensure your bank account and home address information is up to date so there is no question about where the money should be sent.

If you don’t file your return by the time the payments go out, your 2018 AGI will be used to determine how much you are due.

For retirees who are not required to file a return and receive Social Security benefits, the information needed to accurately assess your payment and send it to you is collected from what’s on file with the Social Security Administration (SSA). As long as you received a SSA-1099 form (the Social Security benefit statement), the federal government will send your payment the same way they send your Social Security payment. Disabled individuals are also eligible for the payment.

What if I am not required to file a tax return but also do not receive Social Security benefits?

Use TaxAct’s Stimulus Registration to file your stimulus only return. 

Do not use the IRS’ Get My Payment tool. You must file a 2019 stimulus only return to submit your information.

When will I receive my money?

The IRS started issuing stimulus payments on April 11. A recent press release indicates an initial round of more than 80 million payments hit bank accounts throughout that weekend and into the following week.

We have no additional information as to when all payments will be processed and received.

How will I receive it?

To promote social distancing and get the money in the hands of Americans as fast as possible, the federal government prefers to send the payments via direct deposit. Going the direct deposit route allows you to receive your payment much quicker.

If you don’t have a direct deposit option, however, other solutions are available. Paper checks will be sent if necessary.

What if the IRS doesn’t have my direct deposit information or if I want to change it?

On April 15, the IRS released a new web portal called Get My Payment. This tool allows individuals to check when their stimulus payment will be issued as well as update some direct deposit information.

If you filed your 2019 tax return and did not use direct deposit, you can use Get My Payment to give the IRS your account information. That will expedite the time it takes to receive your payment. Keep in mind, if your stimulus payment is already scheduled to be sent, you cannot update your direct deposit information.

You also cannot use the Get My Payment tool to update your direct deposit information if:

  • You have not filed your 2019 return. In that instance, you must file as soon as possible to give the IRS your accurate bank information. (You can, however, track the status of your payment using the tool.)
  • You filed your 2018 or 2019 return and used direct deposit to receive your refund. To help protect against potential fraud, the IRS is not allowing anyone to change direct deposit information already on file. If your bank account information changed since filing your 2019 return, you will receive your payment via a paper check.

If you deposited your 2018 or 2019 refund into multiple bank accounts, the IRS will deposit your stimulus payment into the first account you listed.

Visit the IRS’ Economic Impact Payment Information Center for more information on the tool.

What if I filed my 2019 return but owed money? 

Use the IRS’ Get My Payment tool to provide the IRS your direct deposit information. You will receive a paper check if you do not submit your bank information.

I paid for my filing fees with my refund. Will my money go to Republic Bank first?

This part is still a bit unclear. We’ve received reports from some customers that their money did get sent to Republic Bank first. At this time, we are unsure if that will be the case for everyone who used that service. 

This is what we do know:

If you already filed your 2019 return and used Republic Bank, they will immediately issue a paper check to you for any stimulus money they receive on your behalf.

If you have not filed your 2019 return but used Republic Bank when filing your 2018 return, they will send any stimulus money received for you back to the IRS. The IRS will then re-process your payment and send it to you via a paper check.

Will I receive my payment on my prepaid card?

At this time, we understand you will not receive your stimulus money on any prepaid card. That is unless you input the routing number of that card into the IRS’ Get My Payment tool and direct them to deposit it there.

Will I be notified of my payment?

The IRS will send you a notice of the payment by mail to your last known address within 15 days after the payment is paid. It will list how the payment was made plus the amount deposited. It also will include information on how to report any payment not received.

If you don’t receive the payment, the notice will also include a phone number for the appropriate point of contact at the IRS. Until you receive your payment, hold onto the notice.

Is this money taxable?

No, the payments are not taxable.

How does that work?

Technically, the money is an advance of a refundable credit on your 2020 return. A refundable credit is a tax benefit you can take advantage of even if you do not owe any tax. If you qualify to claim it, any money that isn’t needed to pay down your tax liability is refunded to you. Basically, the stimulus payments are advance refunds based on your 2020 income.

If you’re confused, that’s understandable; it is confusing. Obviously, no one can be sure how much you’re going to earn in 2020. That’s why the IRS is basing how much you’re due off prior year tax returns. When you file your 2020 return, the IRS will compare what you received this year for the credit with what you qualify for based on your 2020 income.

If you should have received a payment and didn’t, or if you should have received more than you did, you will receive additional money. If the numbers on your 2020 tax return suggest you got more than you should have, you won’t have to pay it back. Considering most people’s incomes don’t flucutate too much from year to year, most everyone should receive the right amount the first go-around.

Will this affect my 2019 refund?

No, these stimulus payments will not change your 2019 refund or impact your anticipated 2020 refund. 

Will I have to pay any of this money back?

No, the IRS guidance at this point indicates you will not have to pay any money back if you are paid more than you end up qualifying for on your 2020 return.

What if I owe money to the IRS for prior years?

Lucky for you, you don’t have to worry about that. Any IRS liabilities you currently have, including any back taxes, won’t be taken out of this money. You’ll still receive your full payment.

For the official notices, visit the IRS’ Coronavirus Tax Relief page.

I still need more information. 

We understand. This is a complicated situation, to say the least. Check out our COVID-19 Response: Stimulus Payment and Deadline Extension FAQ page for more details.

You can also visit the IRS’ Coronavirus Tax Relief and Economic Impact Payments page for additional answers to your questions.

Calculate your stimulus payment. (We’ll walk you through it.)

The formula:

  1. Start by determining your maximum credit
    1. $1,200 for each taxpayer (Single/HOH = $1,200, Joint = $2,400)
    2. Add $500 for each qualifying child
  2. Determine if the credit will be phased out
    1. Single – Phase out starts at $75,000
    2. Joint – Phase out starts at $150,000
    3. HOH – Phase out starts at $112,500
    4. Is your AGI over this amount?
    5. No – your stimulus payment is the credit calculated in Step 1. Stop here.
    6. Yes – go to Step 3
  3. Subtract the amount in Step 2 from your AGI
  4. Multiply Step 3 by 5%
  5. Subtract Step 5 from Step 1. This amount is your stimulus payment

To learn more about how you can help donate 10 million meals, visit TaxAct and Feeding America: Partnering in the Mission to End Hunger. Together we can make a difference.

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