On March 27, 2020, President Donald Trump signed into law, the Coronavirus Aid Relief, Economic, and Security Act, also known as the CARES Act. This act will bring much needed financial help to taxpayers, seniors, unemployed, self employed, and businesses. For most Americans, this would be a great benefit to them.
Before the CARES Act went in effect, President Trump already extended tax day to July 15, 2020. He temporarily suspended installment payments that taxpayers had in place with the IRS, and if your refund was taken after March 5th, you could have it refunded.
Due to the Coronavirus, if your tax refund was offset by The Department of Education a refund may be due to you. The Department of Education has temporarily stopped all processing of treasury offsets and administrative wage garnishments. Federal tax refunds, social security payments including disability payments offset or in the process of being offset posted on or after March 5th are being refunded. Call 1-800-621-3115 for more information.
So let’s discuss the CARES Act. The Trump administration reached a deal on the highly anticipated $2 trillion dollar stimulus package that will send direct payments to American families and rescue the economy and business who have been forced to close amid the coronavirus pandemic. The package will also provide relief to hospitals and state and local governments.
Here’s what you need to know:
Families & Individuals
—Individuals with a yearly income of $75,000($150,000) if you are married will receive a direct check of $1,200 and checks of $500 per child. Those on Social Security or make no money will still get checks. The first Americans to get relief payments from the government won’t see checks til mid-April, around April 13th, and many will have to wait longer. Many people who don’t have direct deposit information on file with the IRS might have to wait months to get the money.
—Unemployment insurance extended & benefits enhanced for four months, including for self-employed, independent contractors, or gig workers. Gig worker is a barber, stylist, uber or lyft driver, nail technician, security guard, bartender, etc. You could receive up to $600 plus the normal amount of your unemployment.
—If you are older, the minimum distribution for retirement requirement is waived.
—The 10% early withdrawal fee on retirement accounts is waived on coronavirus-related distributions.
—COVID-19 testing will made available to those showing symptoms.
—A lot is being offered for business owners as well, such as the SBA Grant of $10,000. Employers don’t have to pay their payroll taxes until 2021 and more.
Not everyone will qualify for a stimulus check. If you owe child support, if you are a dependent on another taxpayer’s tax return, or if your AGI exceed the amount per filing status, you will not receive it.
How will the IRS know where to send my payment?
The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.
For people who have already filed their 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 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.
The IRS does not have my direct deposit information. What can I do?
In the coming weeks, Treasury 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.
I have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?
Yes. The IRS urges 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 an economic impact payment. Taxpayers should include direct deposit banking information on the return.
Dependent children over 16
Parents who have a Social Security number will receive $500 for each child ages 16 and younger. There is no limit on the number of children that qualify.
If you have a dependent child who is 17 or 18 years old, they don’t qualify for the $500 payment.
Any person over the age of 18 who is claimed as a dependent on another person’s tax return is not eligible for an individual or child stimulus payment.
That means college students ages 19 to 23 whose parents pay for more than half of their expenses and claim them on their tax returns won’t get payments. Likewise, adults with disabilities and elderly people who are claimed as a dependent on a family member’s tax return are not eligible.
The IRS is currently working on a portal for individuals to update their banking information and fill other forms that may pertain to them. They have allotted a special site for this and it should be available in the next few weeks. Keep checking www.irs.gov/coronavirus for updates.
The office of Brewer Financial Firm, LLC is also assisting taxpayers with completing paperwork to obtain unemployment, SBA Loan or the SBA Grant that is $10,000 to those that qualify. Call 706-221-5171.