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Coronavirus checks: 5 things the IRS wants you to know

The Motley Fool logo The Motley Fool 4/2/2020 Matthew Frankel, CFP

Video by CNBC

As part of the $2 trillion economic aid bill, hundreds of billions of dollars are being earmarked for one-time economic impact payments to most American households. While the size of the payments has been widely reported, there are some key details that are still unclear -- such as how you'll actually get your payment, what happens if you haven't filed a tax return recently, and what if your information has changed.

While this is still a fluid situation and there are some important details the IRS and Treasury haven't quite figured out yet (to be fair, the bill passed just a few days ago), the IRS recently issued their most up-to-date guidance yet. With that in mind, here are five things about the check that you need to know.

Are you eligible for an aid check?

The checks will provide a payment of as much as $1,200 per adult and $500 for every qualifying child. So, a family of four could get as much as $3,400.

I say "as much as" because in order to get a full payment, your income needs to fall below certain thresholds.

Specifically, if your adjusted gross income, or AGI, is less than $150,000 for married couples filing jointly or $75,000 for single filers, you are eligible for the full payment. Above these thresholds, the payment is reduced by $5 for every $100 in AGI, until eligibility disappears completely for taxpayers with AGI above $198,000 and $99,000 for joint and single filers.

If you've already filed your 2019 tax return, which is now due on July 15, the IRS will use it to determine your eligibility. If you have not filed a 2019 tax return yet, your eligibility will be based on your 2018 return.

Most people won't have to do anything to get the money

If the IRS already has your direct deposit information -- meaning that you had your refund direct deposited on your latest tax return -- you don't have to do anything. Once the IRS and Treasury are ready to send payments, your money will be directly deposited into the same account.

If the IRS doesn't have your direct deposit information

The IRS says the Treasury is planning to develop a web-based portal for taxpayers to provide their bank account information for the payments. The goal is to get the money in your hands as soon as reasonably possible, and the quickest way to do that is to allow everyone to use direct deposit if they so choose. We don't know yet if there will be an option to choose a paper check.

What if you haven't filed a tax return in 2018 or 2019?

The short answer is that even if you haven't filed a tax return for either 2018 or 2019, you can still get a check. However, it may require a bit of effort on your part:

  • If you are not typically required to file a tax return (say, your income is below the threshold that requires you to do so), you'll need to fill out a simple 2019 tax return to qualify. The form isn't available yet, but it's mainly intended to gather information that would determine and facilitate your payment (filing status, number of dependents, and bank information).
  • If you are required to file a tax return and have simply not done so, the IRS encourages you to file as soon as possible so you can get a payment. And the IRS makes clear that the payments will be available to claim throughout 2020, so there's no need to rush if you need to consult a professional tax preparer to get your 2018 and/or 2019 return(s) done.

Here's where you can find the latest information

To reiterate, there's plenty that the IRS and Treasury are still figuring out. Just to name a few unanswered questions:

  • What if the bank account you used on your last tax return for direct deposit has since been closed?
  • What if your AGI on your 2018 or 2019 tax return isn't reflective of your current income?
  • What if you've had another child since you filed your most recent tax return?

Because of this, the IRS has set up an informational coronavirus page where it will post information and instructions as soon as they become available. If you're expecting a check, and there are some details you aren't sure about yet, it's a good idea to check the IRS information page regularly for the most up-to-date information available.

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