Economic impact payments explained


By Martin Graham - mgraham@recordherald.com



Following the passage of CARES Act, the Treasury Department and the Internal Revenue Service (IRS) recently announced that distribution of economic impact payments in response to the COVID-19 pandemic will begin in the next three weeks and will be distributed automatically, with no action required for most people.

According to information available at irs.gov/coronavirus, the relief money will be available to tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns.

“For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds,” the information on the IRS website said. “Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible. Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return. Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.”

According to the IRS, the vast majority of people do not need to take any action to receive the money as the IRS will calculate and automatically send the economic impact payment to those eligible. For anyone who has already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount and for those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.

An important question asked is “The IRS does not have my direct deposit information. What can I do?”

The IRS said in the coming weeks, the Treasury Department plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail. Additionally, the IRS said that those people who do not typically file a tax return can still receive money.

“The IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2018 or 2019,” the IRS said. “This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return. Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time.”

Currently, the IRS is urging anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive the payment, and taxpayers should include direct deposit banking information on the return. Additionally, these payments will be available throughout the rest of 2020.

For the owner of Vanessa Blevins CPA & Company, the tax filing extension to July 15 isn’t going to have a huge impact on her business, but she also encouraged the community to file their taxes for 2019 so they can be eligible to receive this relief money if they haven’t filed in a couple years.

“We have customers through the extension deadline of October 15 anyway, so this isn’t anything unusual, it’s just that there will be some additional time that allows us to get it done,” Blevins said this week. “The deadline extension hasn’t changed our timeline, we are still working on getting all tax filings done as soon as possible like we always do. When people do get this money, I hope they spend it on crisis things like rent, utilities, those important things. For those looking for this money, if you haven’t filed since 2017 then you won’t qualify for this, so make sure you do get your taxes filed sooner rather than later. We continue to encourage our customers to get their information in, we are working the same as we always have, except my employees are working from home. But we are still working full-time.”

The Taxes by Brian Pettit owner said on Tuesday that during the brief time politicians decide on such a relief package, they don’t paint a clear picture of how the process will work. Brian Pettit did say that the IRS knows how much the taxpayers make and what they will receive from this relief, so there is not much any person can change about the amount they get.

“That page is incredibly full and there is a ton of it that is not super relevant to most people, so it is kind of hard to sort out what actually applies to the average person,” Pettit said. “We haven’t been able to get guidance or clarification on some things, for instance if you have a husband and wife and one makes around $170,000 but the other doesn’t work, does the spouse who doesn’t work get $1,200? We have fielded tons and tons of calls. It is hard for us to decipher the hundreds of pages on the irs.gov website that is updated almost daily or every other day to sort out what they are going to do. The best thing we can say is that they know what your income is, they know how you filed and they are going to send you whatever it is they are going to send you. To my knowledge it is not a requirement to file 2019 taxes to get this. The other big question we get is address changes. There is a form — it is technically an 8822 that you would file — it is a really simple form they can fill out online if they go to the IRS website and look it up in the search bar. Mail that in and it will change where you get your check. If you don’t, the IRS will default to your direct deposit method.”

Finally, Pettit said he is unsure where money will go for those who choose to remove tax fees directly from their refund to pay for the filing. At businesses such as Pettit’s or H&R Block, customers who choose to have their fees paid with their refund will usually have the refund placed in an account with the business, which then takes the agreed upon fees and releases the rest to the taxpayer. Pettit said in this case the IRS only has the account information for the business and not the actual direct deposit to the taxpayer. He suggested that the IRS will then probably default to sending the relief check in the mail, but if they are released to the business like Pettit’s, he will notify the taxpayer immediately.

For more information, check out the website at irs.gov/coronavirus for updated information as soon as it becomes available. According to the website, the IRS has a reduced staff in many of its offices but remains committed to helping eligible individuals receive their payments expeditiously. Check for updated information on irs.gov/coronavirus rather than calling the IRS.

Additionally, the IRS uses multiple social media platforms including Twitter, Facebook, Instagram, YouTube and LinkedIn. When using social media to connect with the IRS, verify the accounts by going first to irs.gov/socialmedia. Taxpayers are urged to watch for IRS impersonators and other scammers, who can try imitating the IRS during crisis situations and natural disasters. The IRS reminds taxpayers to never give out personal or financial information to anyone alleging to represent the IRS on a social media platform or in unsolicited emails, texts or calls.

Finally, the IRS also has a free mobile app, IRS2Go, where taxpayers can check their refund status, pay taxes, find free tax help, watch IRS YouTube videos and get daily tax tips. The IRS2Go app is available from the Google Play Store for Android devices, or from the Apple App Store for Apple devices. IRS2Go is available in both English and Spanish.

Reach Martin Graham at (740) 313-0351 or on Twitter @MartiTheNewsGuy.

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By Martin Graham

mgraham@recordherald.com