1. How much money would I expect to get?

Under the bill passed by Congress, if you earn less than $75,000, or you and your spouse collectively make less than $150,000, you’d get $600 for each of you plus $600 for each dependent child under the bill. Those payment amounts would be reduced by $5 for every $100 you earn above the income threshold, which means those earning more than $87,000 as an individual or $174,000 as a couple get nothing. Also receiving the payments: seniors whose only income is from Social Security, railroad retirees and veterans who rely on disability payments. If the Internal Revenue Service issues more than you are supposed to receive, you do not have to pay the excess amount back. The payments are not allowed to be reclaimed to pay back federal or state debts, and banks are forbidden from garnishing the payments.

2. How would that compare with the first round of payments?

The $2 trillion stimulus package enacted in April, the Cares Act, had the same income eligibility thresholds but provided $1,200 for adults and $500 for children. As of mid-November, the IRS had issued about 160 million payments totaling approximately $270 billion under that initial program. It also sent letters to about 9 million individuals who might have been eligible for the money but didn’t receive it, encouraging them to submit their information to see if they qualify. (The latest legislation clarifies that mixed-status immigration households — those in which one spouse has a Social Security number and one does not — can still get payments for the spouse and any children with Social Security numbers.)

3. When and how would I receive the money?

Under the congressional bill, the payments would likely start being sent about a week after it becomes law. Direct-deposit payments will arrive quickest, while checks or pre-loaded debit cards sent by mail could take until late January to start arriving. The IRS was able to begin transferring the first round of payments less than three weeks after the Cares Act was signed into law, but paper checks took longer. IRS Commissioner Chuck Rettig says the agency is better prepared and will be able to process payments more quickly, but hasn’t set a specific timeline. The agency will largely use the address and bank account information collected from taxpayers during the first round of payments to transfer the money. Social Security beneficiaries may not be required to submit any additional paperwork to the IRS, because the agency will likely send them their stimulus payments just as they normally disburse their other monthly benefits.

4. What happens if my income or family situation has changed in 2020?

The IRS will use the information from your most recent tax return — in most cases from 2019 or 2018 — to determine eligibility based on your income, marital status and dependents. However, many people have taken pay cuts or lost wages in 2020 as a result of the pandemic. If you weren’t eligible for a payment based on your most recent tax return on file at the IRS, but would be based on lower income in 2020, you can inform the IRS on the tax return you file in the spring. On that paperwork, you can claim the payment for yourself and any qualifying dependents. The IRS will add the additional amounts to your tax refund.

5. What if I’m still waiting for the first check?

If that first payment hasn’t yet hit your bank account or mailbox, or you got less than you think you’re owed, you can also add that claim on the tax return you file in 2021. The IRS is calling it the Recovery Rebate Credit, and this year’s version of the Form 1040, the individual tax return, has instructions on how to fill that out. You can check the status of your payment at the IRS’s Get My Payment online tool.

6. Do I owe any taxes on stimulus benefits?

No. These direct payments aren’t subject to federal taxes. However, individuals who receive unemployment benefits will be subject to taxes on that money, which will be due when they file their tax returns this spring.

7. Why is there now uncertainty about if Trump will approve the payments?

After the House and Senate approved the legislation containing the $600 payments, Trump said Congress should boost the amount to $2,000 and indicated he may not sign the legislation without the increase. House Democrats, who had pushed for more money for direct payments during negotiations, are seeking to pass a new bill that would raise the amount to $2,000, but the Republican-led Senate is unlikely to take it up. The last-minute standoff could result in a partial government shutdown if Congress and the White House aren’t able to find a solution quickly, because the original bill Congress passed Dec. 21 also contains $1.4 trillion in government funding.



Source link