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What you need to know about the Stimulus Checks
April 2, 2020
The Coronavirus has infected our life in many ways. Family and friends are sick, quarantined or under a stay-in-place order. The stock market has crashed. The kids are out of school. Restaurants and shopping malls are closed. More than three million unemployment claims were filed in one week. Enough of the cable news . . . If you are laid off or you have closed your business, you know the details.
After a lot of talk, Congress did something. President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), a $2 trillion stimulus package to mitigate the impact of the Coronavirus pandemic. The CARES Act includes stimulus payments of $1,200 for each individual and $500 for each dependent child, defined by the child tax credit rules as under age 17.
Who and How Much?
Individuals with adjusted gross income (AGI) up to $75,000 a year are eligible for the full $1,200 payment. The payment is reduced by $5 for every $100 in income above $75,000. The payment amount is entirely phased out at an AGI of $99,000.
Married filing joint (MFJ) couples with AGIs up to $150,000 a year are eligible for a $2,400 payment. The payment is reduced by $5 for every $100 in income above $150,000. The payment amount is entirely phased out at an AGI of $198,000 (if the taxpayers have no dependent children). Married couples also will receive an additional $500 for every dependent child under 17.
Example - MFJ with no children. Keith and Norma are married filing joint. They have no dependent children. If they have AGI of $150,000 or less, they are eligible for a $2,400 payment. If they have AGI above $150,000, their rebate will be reduced and finally phased out at an AGI of $198,000.
Example - MFJ with two children. Chris and Pat are married filing joint. They have two dependent children under age 17. If they have AGI of $150,000 or less, they are eligible for a $3,400 payment. If they have AGI above $150,000, their rebate will be reduced and finally phased out if their income hits the top of the threshold amount.
Head of household filers with AGIs up $112,500 a year are eligible for the full $1,200 payment and an additional payment of $500 for each dependent child under age 17. The payment is reduced by $5 for every $100 in income above $112,500. Head of household taxpayers will also receive an additional $500 per dependent child under age 17. With no eligible children, a head of household filer is phased out at AGI of $137,000. With one eligible dependent child, a head of household filer is entirely phased out of the rebate payment at AGI of $146,400.
Example - Head of Household - no children under 17. Heather has an 18-year-old high school senior living with her and qualifies as a head of household filer. If her AGI is $100,000, Heather’s payment is $1,200. Her dependent child does not qualify her for the additional $500 payment because the child is not under age 17. If Heather’s dependent child is under age 17, her payment is $1,700.
Phase-out of the rebate. If your income is above the threshold amounts, a reduced payment will result. The reduced amount using your own income (AGI) can easily be calculated using the Washington Post calculator.
What needs to be done to get the Stimulus Rebate?
Nothing. The IRS will deposit the calculated amount directly into your bank account, using the AGI and the bank information on your 2019 tax return. If your 2019 return hasn’t been filed, the IRS will use the AGI and the bank information from your 2018 tax return. If there’s no bank information on the return, the IRS will mail a check.
When Will the Payments Arrive?
The IRS says that a direct deposit should be in your bank account in about three weeks. Checks should start arriving in six to eight weeks.
2020 Tax Return
Technically the stimulus rebate is a 2020 refundable tax credit. The payment received in the next few weeks is an IRS advance. If you have less income in 2020 than in 2019 because of layoffs, reduced hours and closed businesses, and your rebate payment was reduced by the income threshold, you’ll receive a credit for the difference on your 2020 return. If for some reason, you receive too much of an advanced payment, you do not have to pay back the excess.
Contact us if you have questions and stay safe.
The Team at Tax & financial Solutions
Watch out for Stimulus Check Scams
March 30, 2020
We are writing to alert you about warnings from the IRS about a dramatic increase in scams, fraud and identify theft all related to the ongoing coronavirus COVID-19 crisis.
You can find detailed information on the IRS website about these ongoing scams, and we urge you to review the IRS recommendations to help avoid falling victim to any of this fraudulent activity.
According to IRS Commissioner Chuck Rettig: “The IRS isn't going to call you asking to verify or provide your financial information so you can get an economic impact payment or your refund faster. That also applies to surprise emails that appear to be coming from the IRS. Remember, don't open them or click on attachments or links.”
The IRS reminds taxpayers that scammers might:
- Emphasize the words “Stimulus Check” or “Stimulus Payment.” The official term is economic impact payment.
- Ask the taxpayer to sign over their economic impact payment check to them.
- Ask by phone, email, text or social media for verification of personal and/or banking information saying that the information is needed to receive or speed up their economic impact payment.
- Suggest that they can get a tax refund or economic impact payment faster by working on the taxpayer’s behalf. This scam could be conducted by social media or even in person.
- Mail the taxpayer a bogus check, perhaps in an odd amount, then tell the taxpayer to call a number or verify information online in order to cash it.
Go to www.IRS.gov for the most up-to-date information.
The Team at Tax and Financial Solutions
Starting Monday, March 23rd, we will temporarily discontinue face to face client meetings
March 20, 2020
To Our Valued Clients:
As you may be aware, the World Health Organization (WHO) has declared COVID-19 a global pandemic disease and the Centers for Disease Control and Prevention (CDCP) considers the United States to be at an elevated risk. Although the situation is rapidly evolving, we are continually monitoring direction from the state and federal government and are prepared to follow their directives.
As the number of cases continues to rise, we have taken numerous precautions to keep our office as healthy and germ free as possible. In particular, we, like you, are concerned about face to face meetings and want to emphasize the importance of Social Distancing. Starting Monday, March 23rd, we will discontinue face to face client meetings in our office until it is deemed safe.
You can drop off your tax documents or mail them to us. We can also set you up with a secure client portal that allows you to scan and upload your documents to us. Please contact us if you would like to be registered for a portal. Once we receive your documents, we will put time on our schedule to prepare your tax returns. After reviewing your documents we will call you to verify information and review the results.
Once your tax return is complete, we will call you to schedule a time for you to pick up and sign for your taxes. If that isn’t convenient for you we can mail your documents to you or upload them through the client portal.
Announced Today: The deadline for filing and paying your 2019 tax return has been extended to July 15th. We anticipate that Oregon will follow suit and we will update you when that information becomes available.
All of us at Tax and Financial Solutions feel deeply for those who have been impacted by the COVID-19 outbreak. We are working hard to make sure there is no interruption in service for you. We value your business and your health and safety as well as the health and safety of our employees. Please contact us with any questions or concerns you might have.
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