April 29, 2020
The IRS recently began sending stimulus payments authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. These payments, which are technically tax rebates, can be up to $1,200 for individuals or $2,400 for married couples, with some exceptions. To assist individuals and families who have not received their payment yet, the IRS launched an online tool that allows people to check on their status. It is reportedly similar to the tool used to track tax refunds. The IRS has also issued a warning about possible financial scams targeting these payments.
Coronavirus Stimulus Payments
Section 2201 of the CARES Act establishes “2020 recovery rebates for individuals.” These are more commonly known as stimulus payments. The IRS sometimes refers to them as Economic Impact Payments. The “payments” are a credit against future federal income taxes, but since the CARES Act makes them refundable, the IRS is sending payments to individuals and families.
The maximum amount of $1,200 is available to any individual whose 2018 or 2019 federal income tax return shows adjusted gross income (AGI) of $75,000 or less. For married couples who filed a joint return, the maximum payment of $2,400 is available to anyone with AGI of no more than $150,000. Additionally, households with minor dependent children receive $500 per child.
For people whose AGI exceeds those amounts, the payment is reduced by five percent of the excess over the threshold amount. For example, a married couple with one child would have a maximum possible payment of $2,900. If they have AGI of $200,000, however, the payment would be reduced by five percent of the difference between $200,000 and $150,000, or $2,500. Their ultimate payment would be $400.
To be eligible to receive a payment, a person must have filed a tax return for 2018 or 2019. Individuals who are claimed as a dependent are not eligible. This could include college students and other young adults. “Nonresident aliens” are also not eligible, and this could affect the eligibility of U.S. citizens who are married to noncitizens.
IRS Tracking Tool
The IRS launched an online tracking tool called Get My Payment to allow individuals to find out the status of their payment if they have not received it yet. If the IRS does not have all of the information it needs to process a payment, this tool is supposed to let people know.
The CARES Act directs the IRS to use information in a person’s most recent tax return to determine where to send payments. If the IRS has direct deposit information, it will deposit the payment there. Otherwise, it will send a check to the address on file.
Federal and state officials are teaming up in several states to track and fight scams relating to the coronavirus pandemic. One of these groups, the Virginia Coronavirus Fraud Task Force, has issued a warning about fraudulent schemes involving stimulus payments. These schemes often involve “phishing,” meaning the use of phone calls, email, or text messages that look like they come from the IRS or another government agency, with the intent of obtaining personal information that could be used in identity theft. The warning states that “any unsolicited calls or emails from individuals or entities who claim to be associated with the IRS are fraudulent.”
The tax advisors at Enterprise Consultants Group are available to help you with your questions and concerns about taxes. Please contact us online or at (800) 575-9284 today to discuss your case with a member of our team.