Since the passing of the Coronavirus Aid, Relief and Economic Security (CARES) Act, many Americans are anxiously wondering how the legislation will impact them. Specifically many are curious if and when they’ll receive the recovery rebate for individual taxpayers, which is also being called an economic impact payment.
Not all will receive this stimulus, not all will get it at the same time, and not all will get the same amount. Let’s explore the distribution so that you can determine if and when you’ll get a stimulus check.
Who Qualifies for A Recovery Rebate?
You must meet one of the three following requirements:
- Meet one of the listed income thresholds below on your 2018 or 2019 federal taxes and be a U.S. citizen or permanent resident.
- Receive retirement benefits from the Railroad.
- Be either a Social Security retirement, survivor beneficiary, or disability recipient.
What Are The Income Thresholds?
Again, not all taxpayers will get a stimulus. The legislation did not specify a minimum threshold, meaning that it doesn’t matter how little you made in either 2018 or 2019, but it does matter if your adjusted gross income was too high.
- For a single taxpayer with no children, you will not get a stimulus if your income exceeded $99,000.
- For joint taxpayers with no children, you will not get a stimulus if your combined income exceeds $198,000.
- For single taxpayers, you will get a stimulus that’s been “phased down” if you make between the income maximum and $75,000.
- For joint tax payers, you will get a stimulus that’s been “phased down” if you make between the income maximum and $150,000.
- Head of household tax payers will receive a stimulus check that’s “phased down” if you made between the income maximum and $112,500.
How And When Are The Recovery Rebates Being Distributed?
If any of the above are true, then you’ll automatically receive a stimulus deposit into the financial account your monthly benefits or tax return was deposited. The direct deposit process began on April 9th, officials have estimated that the majority of direct deposits should be completed by April 17th.
April 17th is also the day the IRS plans to release the “Get My Payment” tool to help those who haven’t received their stimulus payment enter their direct deposit information.
The above will be an important tool for taxpayers who didn’t direct deposit their 2018 or 2019 federal tax returns. These taxpayers will otherwise have to wait for a paper check to get their stimulus funds. The IRS plans to start sending paper checks out on April 24th, and they’ll begin with the lowest incomes first. They’ve estimated they can issue about 5,000 per week, which means that it could likely be as late as September before some get their stimulus in the mail if they don’t use the “Get My Payment” tool to switch to a direct deposit.
How Is My Income Threshold Determined?
These income figures will be based on either your 2018 or 2019 federal tax return. Why two years? Only one will be applicable; the 2018 tax return will only be used for taxpayers who’ve yet to file their 2019 taxes due to the COVID pandemic or other extenuating circumstances.
What Are The Stimulus Amounts?
The maximum rebate is $3,500 for qualifying joint filers with two or more children. No more than two children will be counted toward the stimulus amount.
For qualifying individuals with less than $75,000 taxable income, you’ll receive $1,200.
For qualifying joint taxpayers with less than $150,000 taxable income, you’ll receive $2,400.
Individuals and joint taxpayers with dependent children under the age of 17 will receive $500 per child for up to two children. Those ages 17 and up, such as college students, being claimed as a dependent on a parent’s federal income tax return will not qualify for a stimulus, and their parents will also not receive a stimulus on the child’s behalf.
The income groups that are phased down are done so by five percent of each dollar over the $77,000/$112,500/$150,000 up to their respective maximum threshold. It’s the equivalent of $50 per $1,000 of earned income. So, a childless single taxpayer making $78,000 will get a reduced stimulus of $1,150.
There’s one exception to the above, and it involves the 2020 tax season and your 2020 income. Should your income have changed in 2020 from its previous tax year and now meet the income thresholds, then you will eventually get a stimulus, too. The appropriate credit will be reflected when you file your 2020 taxes.
Speaking of income changes, it’s important to note that 2018-2019 taxpayers whose income has gone up in 2020 to exceed the threshold will not be required to pay the money back nor be penalized on their 2020 taxes for receiving it. It’s simply a forgiven loophole.
Will The Stimulus Count Against Me In Any Way?
These stimulus amounts will not be considered taxable income, meaning it will not be counted against Social Security, welfare programs like WIC and SNAPS. It will also not be a factor in your taxable incomes when determining your tax rate when you file your 2020 taxes. However, such groups should be aware that stimulus left in their accounts could affect eligibility based on the specific program’s requirements regarding asset counting.
Back-taxes, repayment plans for overpayment of federal or state funds, defaulted federal student loans and so forth have no influence on if, when, or how much stimulus you receive, and such entities can’t withhold your stimulus.
