No stimulus money yet? New baby in the family?
Confused because you made a decent income before the COVID pandemic and you got no stimulus payment — but got laid off this year so you now qualify?
The new round of stimulus payments means a new round of questions, confusion — and so far this time, some quick answers.
That wasn’t the case last year, but eventually, “most of it got straightened out,” said Claudia Stanley, a certified public accountant in Fresno.
Like other tax preparation experts, she expects a new barrage of questions and concerns as people begin seeking tax advice. Already, there’s been some controversy because many people reported the new stimulus payments going into the wrong accounts.
The federal government began sending out the payments after President Donald Trump signed legislation authorizing the checks on Dec. 27.
Stimulus payments of $600 per adult and $600 per dependent child are available for people with adjusted gross incomes at or below $75,000 for an individual, $112,500 for a head of household and $150,000 for a couple filing federal taxes jointly
Above those levels, the payment drops $5 for every $100 that income goes above those amounts. That means an individual with no children would no longer get a payment once their income is more than $87,000. Other thresholds: A couple with no children filing jointly, $174,000 and for a family of four, $198,000.
Stanley advised that as you read the IRS website and talk to your tax preparer, “Don’t let the various payment names throw you – ‘Economic Impact Payment,’ ‘Stimulus Payment,’ ‘Recovery Rebate,’ are all names for the same thing.
But getting the payment may not be as easy as calculating it. Here are five concerns that have been most prevalent on social media and among our readers so far, with help from Stanley, the Internal Revenue Service, the Tax Foundation and the House Ways and Means Committee Republican staff:
1. The stimulus money went into the wrong account
The IRS has announced steps it says will help remedy the problem.
“Taxpayers do not need to take any additional action at this time and should continue to monitor their accounts for deposits,” says a fact sheet from House Ways and Means Committee Republicans.
The IRS has said it will reissue the stimulus payments for those who did not get them because a bank account had been closed or problems with temporary bank accounts affected by glitches in tax preparation software.
Where tax preparers were not able to provide the money because of the initial IRS guidance, they are now awaiting word from the IRS to reprocess the payments.
“These glitches have been ironed out largely over the past week, but this is something to watch out for,” said Garrett Watson, Tax Foundation senior policy analyst. If you still find problems, call or email your member of Congress for help.
2. Your family size changed during 2020
A newborn baby in a qualifying family is eligible for the $600 per child rebate. The Tax Foundation, though, notes that if the child was born after December 31, 2019, “the family will not automatically receive the $600 rebate amount for the child born in 2020.”
But the stimulus payment will be coming. To get it, the family can claim stimulus funds on a 2020 tax return.
3. Your income changed dramatically last year
The IRS is using the same system to process the new stimulus payment that it used last year.
“Eligible individuals who filed a 2019 joint tax return will receive up to $1,200, and all other eligible individuals will receive up to $600. Those with qualifying children on their 2019 tax return will receive up to $600 in additional payment per qualifying child,” the IRS says.
If a 2019 income was too high to qualify, but it plunged last year, any 2020 stimulus payment due can be subtracted from your tax liability on the 2020 return. If the stimulus credit exceeds the 2020 tax liability, it is refundable.
4. The IRS has no direct deposit information for me
If the IRS has a current address, you will get a paper check or debit card.
If the IRS does not have that information, the payment will be available when you file your tax return this year. Claim the recovery rebate credit on the tax form.
IRS advises that new economic impact cards will be issued. Old ones will not be reloaded.
“If you received an EIP Card for the first Economic Impact Payment, it does not mean you will receive an EIP Card for the second payment, you may receive a check,” an IRS fact sheet “If you received a check for the first payment, you may receive an EIP Card for the second payment.”
IRS adds this note: “The EIP Cards being issued for the second payments are sent in a in a plain white envelope which prominently displays the U.S. Treasury seal and ‘Economic Impact Payment Card’ in the return address. The envelope will also have the following notation: ‘Not a bill or an advertisement. Important information about your Economic Impact Payment.”’
5. Social Security, VA recipients
Social Security and Veterans Administration beneficiaries who normally don’t file tax returns do not need to submit new paperwork to receive a stimulus check.
“Social Security retirement and disability beneficiaries, railroad retirees, and those receiving veterans benefits do not need to file to receive their rebate,” Ways and Means Republicans advise.
The IRS has been working with the Social Security Administration, Railroad Retirement Board, and the Veterans Administration to get the data needed to send rebate checks in the same manner that people get their other benefits.