Many taxpayers have begun receiving their economic stimulus checks this week but there is still a lot that is unknown about these payments. Here are some frequently asked questions about these payments and what you need to know.
Am I eligible to receive a stimulus check? For individual filers to receive the max $1,200 stimulus check their AGI must be less than $75,000. After that the amount received goes down $5 for every $100 of earnings over $75,000. If you make over $99,000 as a single filer you are not eligible.
For head of household, they will receive the full amount if their AGI is less than $112,500 and will receive $5 less for every $100 of income until $136,500.
For married filing jointly filers, they will receive the total $2,400 as long as their combined AGI is less than $150,000, that amount lessens $5 for every $100 of income up until $198,000.
Families will also receive an additional $500 for each dependent under the age of 17.
I owe money for previous tax years, will this be used to pay that debt? NO, the IRS will only use these funds to pay delinquent child support payments, not any tax owed to the Federal or state governments.
We just had a baby, will we get the $500 dependent rebate? YES, but not right away. When you file your taxes for 2020 you will receive the additional $500 rebate then.
How do I know if I qualify? There is an online tool to check your eligibility to receive the stimulus check but be warned, many people who should qualify get these payments are getting error messages that their eligibility cannot be determined. There have been multiple news reports about this tool and the faulty error messages so a fix should be coming. Just know if you receive this message it could be in error and you could still get a stimulus check.
Is this money taxed as income? NO, this is an advanced payment of the 2020 tax credit so it is nontaxable.
How do I get my money? If you have previously set up direct deposit with the IRS for tax payments and returns then your check will be direct deposited into your account. If you have not set up direct deposit, you will have to wait for your check to arrive in the mail. You don’t have to apply to receive these funds they use your most recently filed tax return.
I took a required minimum distribution in February, now that the required minimum distributions have been waived for the year can I put it back into the IRA? YES, if you return the funds to the account by July 15 it will be treated as a tax-free rollover. If you took your distribution in January you are not included in this at this time, but it is expected that the IRS will issue a new RMD waiver and it could include a broader time frame for relief.
My business applied for the Paycheck Protection Program, if I get the loan and it is forgiven, is that taxable as income? NO, loan amounts forgiven under the PPP are nontaxable according to stimulus law.
Information regarding taxes and other relief right now is ever changing so make sure to continue to check with your tax preparer if you have questions or are concerned about something. We are always available to help in any way we can at (601) 936-9288.