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Coronavirus rescue checks: How much, when and other questions answered

Kiplinger logo Kiplinger 2 days ago Rocky Mengle, Tax Editor
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People have a lot of questions about the economic aid checks that were just approved by the Senate. We have answers.

Although the law hasn't been finalized quite yet, it sure looks like Uncle Sam is going to be sending you a check sometime soon under a bill passed by the U.S. Senate. To counter the coronavirus-induced economic meltdown, the Trump administration and Senate leaders worked out a plan to flood the U.S. economy with cash and provide relief for Americans who are taking a financial hit. One way to do this is to send us all direct payments from the government's coffers. But there are a lot of unanswered questions about these payments. At the top of the list: How much will we all get? And when will we get it?

Fortunately, we have answers to these and other frequently asked questions about the checks. We also have a handy Check Calculator that tells you how much money you can expect (everyone's check will be different). Read on to get the answers you need to the questions you have. Once you know more about the payments, you can start figuring out how you can use the money to your advantage.

SEE ALSO: 11 Coronavirus Aid Measures That Could Help You in 2020

How Many Checks Will I Get?

You'll get just one payment. Earlier proposals required multiple checks. One plan put forth by a group of Democratic Senators even called for quarterly payments to Americans until the crisis ends. However, the bill passed by the Senate only authorizes a single payment.

How Much Money Will I Get?

Everyone wants to know how much money they will get. You may have heard that checks will be for $1,200--but it's not that simple. That's just the base amount. Your check could actually be much higher or lower.

To calculate the amount of your check, Uncle Sam will start with that $1,200 figure. If you're married and file a joint tax return, then both you and your spouse will get $1,200 (for a total of $2,400). If you have children who qualify for the child tax credit (they must be 16 years old or younger), you get an additional $500 for each child. So, for example, a married couple with two children can get up to $3,400.

Now the bad news. Payment amounts will be phased-out for people at certain income levels. Your check will be gradually reduced to zero if you're single, married filing a separate tax return, or a qualifying widow(er) with an adjusted gross income (AGI) above $75,000. If you're married and file a joint tax return, the amount of your check will drop if your AGI exceeds $150,000. If you claim the head-of-household filing status on your tax return, your payment will be reduced if your AGI tops $112,500.

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Also note that the IRS, which will issue the payments, will look at your 2019 tax return for your filing status, AGI, and information about your children. If you haven't yet filed your 2019 return (now due July 15), the IRS will go to your 2018 return for the necessary information.

Again, we have an easy-to-use Check Calculator to help you figure out the estimated amount of your check. Check it out!

What If I Didn't File a Tax Return in 2018 or 2019?

Some people didn't file a tax return for 2018 or 2019 because their income didn't reach the filing requirement threshold--especially since the standard deduction was nearly doubled starting with the 2018 tax year. If the IRS doesn't have a 2018 or 2019 tax return with your name on it, it can pull information from a 2019 Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement, to calculate your check amount.

But what if you didn't receive Social Security or Railroad Retirement benefits in 2019? We don't know for sure yet what will happen in that situation (i.e., no 2018 or 2019 tax return, and no SSA-1099 or Form RRB-1099). However, at this point, there is a chance you might not get a check. If you're in this position, you might want to file a 2019 tax return quickly. You can file a return even if you're not getting a refund and you don't owe any tax. (For the 2008 stimulus checks, the IRS said to file a return showing just $1 of income and at least $1 of AGI even if you actually had no AGI.) If you get your return in before the IRS starts processing your payment, then you should get a check.

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However, even if you don't get a check now, you won't lose out on the money--you'll just have to wait until next year to get it. The way the law is written, the checks that will be sent now are actually just advanced payments of a new refundable tax credit for the 2020 tax year. So, if you don't get a payment in 2020, you can claim it next year as a refund or reduction of the tax you owe if you file a 2020 tax return by April 15, 2021.

Will Lower-Income People Get Smaller Checks?

An earlier version of the bill did provide smaller checks for lower-income Americans; however, that is not part of the bill ultimately passed by the Senate. Under the earlier version, taxpayers with little or no income tax liability, but at least $2,500 of "qualifying income" (earned income, Social Security retirement benefits, and certain compensation and pension benefits paid to veterans), would have gotten a minimum rebate check of only $600 ($1,200 for joint filers). Again, however, that provision was dropped from the bill.

When Will I Get My Check?

President Trump has said that he wants checks to be delivered within a couple of weeks. That may be a bit too ambitious, though. The law instructs the IRS to send payments "as rapidly as possible." But remember, the IRS is short-staffed right now thanks to the coronavirus pandemic. Back in 2008, when similar payments were issued, it took a couple of months for a fully-staff IRS to get checks in the mail.

One advantage the IRS has now, though, is the fact that the vast majority of taxpayers have refunds directly deposited into their bank accounts now. That means the tax agency already has bank account numbers and bank routing numbers for millions of Americans. With that information in hand, the IRS can make electronic payments to a lot of people. This method of payment takes far less time than printing and mailing a paper check. The IRS will attempt to make payments electronically for anyone who authorized the direct deposit of a refund into their bank account at any point after 2017. If a direct deposit is rejected (e.g., if the bank account information is incorrect), the IRS will receive a rejection notice. At that point, the payment will be converted to a paper check and mailed to you.

Will the Money I Get Now Be Taxed Later?

No. As we mentioned earlier, the check you receive is really just an advanced payment of a tax credit for the 2020 tax year. As such, it won't be included in your taxable income.

What If I Had a Child in 2019 But I Haven't Filed My 2019 Return Yet?

If you had a baby last year, but you haven't filed your 2019 return, you might be worried about losing $500 because the IRS doesn't know about your new bundle of joy. That actually could be a problem--you won't get that extra $500 in your check. However, if you have a child that isn't reflected on your most recent return, you'll be able to account for him or her when you file your 2020 return next year (you'll get an extra $500 credit). So, while you won't get that extra $500 in your check now, you will still get it later.

What If My Child Turned 17 in 2019 But I Haven't Filed My 2019 Return Yet?

You only get an additional $500 for a child who qualifies for the child tax credit. That means your son or daughter can't be older than 16. However, don't get too excited if your child turned 17 in 2019, but you haven't filed your 2019 tax return yet--you're not going to get an extra $500 that you don't deserve.

This scenario isn't directly addressed in the bill passed by the Senate. However, here's how we think this situation might play out: The IRS will know your child's age based on previous tax returns, so they might adjust your check accordingly. It is also possible that they include the extra $500 in your check, but don't expect to keep it if that happens. The IRS is authorized to issue regulations or guidance "deemed appropriate to avoid allowing multiple credits or rebates to a taxpayer." Look for the IRS to address this issue one way or another in a fashion that prevents you from getting, or keeping, $500 for your 17-year-old child.

Will Young Adults Who Live with Their Parents Get a Check?

Even if they have a job or are a student, young adults who still live at home will not get a check if they can be claimed as a dependent on anyone else's tax return (whether or not they are actually claimed as a dependent on someone's return). The IRS will look at your 2019 or 2018 tax return to determine if someone could claim you as a dependent.

Nonresident aliens, trusts, and estate won't get checks, either.

Do I Have to Have a Social Security Number to Get a Check?

Yes, you must have a Social Security number to receive a check. Your spouse and any child you're receiving $500 for must also have a social security number. An individual taxpayer identification number (ITIN) is not good enough.

SEE ALSO: 15 Safe Ways to Earn Extra Cash in the Age of the Coronavirus

There are two exceptions to this rule. First, an adopted child can have an adoption taxpayer identification number (ATIN) instead of a Social Security number. Second, for members of the U.S. armed forces, only one spouse needs to have a Social Security number.

Will the IRS Take My Check If I Owe Back Taxes?

The money is generally not subject to reduction or offset to pay back taxes or other debts owed to the federal government.

What If My Check Doesn't Arrive?

Within 15 days of mailing your check (or directly depositing it into your bank account), you will receive a notice in the mail indicating the method of payment, the amount of payment, and an IRS phone number to call if you didn't receive your payment.

Both the payment (paper check) and notice will be mailed to your last known address the IRS has on file. If you have recently moved, you should file a Form 8822 with the IRS and a change of address notice with the U.S. Postal Service. This will ensure correspondence and payments from the IRS will be sent to your new address.

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