The Internal Revenue Service late this afternoon issued guidance (IR-2020-61) about the CARES Act economic impact payments that will be made. These are the payments to eligible individuals based on income levels. The IRS has announced that they will begin sending out the payments in the next three weeks. Here are the details.
No action needed by you.
First, for most citizens there will be no action that is needed to get the payments. The IRS will calculate and automatically send the economic impact payment to those eligible.
For those of you who have already filed your 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from your 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on your 2018 tax return.
For some low income or older taxpayers whose income level is below the filing threshold, they will need to file a tax return. We were hopeful that, at least for Social Security income recipients the Treasury would simply compare those receiving payments to those who file returns. Their systems are already set up to do this every year anyway, but apparently that may make too much sense.
What if I’ve changed banks or accounts?
The Treasury is claiming that in the coming weeks (the real question will be how many weeks, Treasury is notorious for very outdated technology systems) they will have a secure Web-based portal for you to provide updated banking information.
What if I can’t or don’t do direct deposit?
No worries, a good old-fashioned paper check will be mailed to your address of record.
How much will I receive?
If you had adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns you will receive the full payment of $1,200 each adult and $500 per child.
If your income is above those amounts, your payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are therefore not eligible.
Do you need help sleeping?
If so, we’ve finally gotten through the 880 pages of the CARES Act and have a 32-page section-by-section summary you can download by clicking here. Happy reading.
What about all the other business provisions of the CARES Act?
We have been in close communications with many lenders and it is expected that by the end of this week information about how to apply for relief under the business provisions of the CARES Act will be formulated. Our fingers are crossed that this happens that quickly. Stay tuned, we will let you know as the details unfold.
If you have any questions or need any assistance call the team at Scholl & Company, LLP at (831)758-5966 or email help@schollcpa.com.