04/14/2020
Economic Impact Payment - Mythbuster edition (long but informative post)
There are many questions out there regarding the impending stimulus payment. Have you heard any of these? ....i won't get a payment because I didn't file a tax return ....the payment will be taxable income ...the payment is a credit against my 2020 refund ...the payment is contingent on me filling out the 2020 Census ...it doesn't matter for me because they will just garnish my payment anyway. So let's take a look at these...
I won't get a payment because I didn't file a tax return - MYTH (mostly)
- No additional action is needed by taxpayers who:
*have already filed their tax returns this year for 2019. The IRS will use this information to calculate the payment amount.
*haven’t filed yet for 2019 but filed a 2018 federal tax return. For these taxpayers the IRS will use their information from 2018 tax filings to make the Economic Impact Payment calculations.
People who aren't typically required to file a tax return
Social Security and Railroad Retirement recipients who are not typically required to file a tax return need to take no action. The IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate Economic Impact Payments of $1,200 to these individuals even if they did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits. Social Security Disability Insurance (SSDI) recipients are also part of this group who don't need to take action.
For Social Security, Railroad retirees and SSDI who have qualifying children, they can take an additional step to receive $500 per qualifying child.
There are other individuals such as low-income workers and certain veterans and individuals with disabilities who aren’t required to file a tax return, but they are still eligible for the Economic Impact Payments. Taxpayers can check the IRS.gov tool - Do I Need to File a Tax Return? - to see if they have a filing requirement.
If you don’t have to file, use the "Non-Filers: Enter Payment Info Here" application to provide simple information so you can get your payment.
The payment will be taxable income - MYTH
The payment is a credit against my 2020 refund - MYTH
The payment is NEITHER taxable and it IS NOT a credit against your 2020 refund. The explanation below is a bit dry but it confirms that these two statements are MYTHS...
The CARES Act’s use of the Internal Revenue Service’s (IRS) tax infrastructure to facilitate these payments has caused substantial confusion. That’s because legally the payment is considered a tax credit advanced to the recipient from the (future) 2020 tax return — that is, the return the recipient will file in 2021. This has led some to believe that the payment either needs to be paid back in full in 2020, or that the payment is considered taxable income, or that the payment counts against one’s 2020 tax refund. None of these conclusions, however, is true.
That’s because another provision written into the law dictates that recipients of the economic impact payment will be credited as if they had paid the government back. This makes the payment a non-taxable fund that does not affect future returns.
The payment is contingent on me completing the 2020 US Census - MYTH
According to the US Census bureau this is NOT true.
I won't get the payment because the Gov't will garnish it for unpaid student loans or IRS obligations - MYTH (mostly)
The IRS has “temporarily suspended nearly all efforts to garnish tax refunds to repay debts, including those to the I.R.S. itself.” The only possible exception concerns people who are behind on child support payments. “Treasury is explicitly allowed to “intercept” (garnish) the stimulus rebate to offset against child support debt” “However, it cannot garnish the rebate for other types of federal debt, such as student loans.”
Hopefully this puts to rest some of the misinformation regarding the Stimulus payment. If anyone has questions we are happy to assist. Stay safe and healthy.
