Let me start out this week by saying we all hope that you, your family, your friends, and your co-workers
all stay safe and healthy in these unprecedented times. We all hope and pray that our leaders continue to
make the best decisions possible. This will pass, but it is going to take time. We don’t have all the answers
and we are getting new information daily that might change both the questions and the answers.
One of the questions we’ve started fielding this week concerns the $1,200 stimulus checks that are part
of the economic stimulus bill that was passed by Congress earlier this week and signed into law by
President Trump on March 27th. How much you’ll get, or even if you’ll get anything, has been a much discussed topic.
Here are the basic rules as we understand right now.
The base amount of the payment is $1,200, but that is per taxpayer. So, if you’re married, your spouse
will also qualify for a $1,200 payment, so married couples will have a base payment of $2,400. There is an
additional $500 per child payment for children that qualify. The child must be age 16 or younger.
In order to qualify for the full payment, you must meet income and filing requirements. If you’re single,
married filing a separate return or a qualifying widow(er), your payment will reduce to zero as your income
increases above $75,000. Married couples filing a joint return will see their payment reduce as their
income increases above $150,000 and if you claim head-of-household your payment is reduced if your
income is greater than $112,500.
Payments are initially based on your filing status, dependents and income from your 2019 return. If you
haven’t filed your 2019 return (not due until July 15th), payments will be based on your 2018 return. If you
didn’t file a 2018 or 2019 return because your income didn’t require you to file, the IRS will use Social
Security information to determine eligibility. We don’t know at this point if you don’t file and don’t collect
Social Security how the IRS will determine eligibility. If you’re in that situation, you might want to file a
2019 return, even though it’s not required, just to give the IRS your information. The last stimulus checks
were sent in 2008 and then the IRS said to file a return showing at least $1 of income even if you had no
income to qualify. As long as you file before the checks are sent out, you should qualify.
As with previous stimulus payments, the checks sent out now are actually advance payments of a new
refundable tax credit for the 2020 tax year. Qualification for the credit will ultimately be on based on your
2020 filing status, dependents and income. So, if for some reason you don’t get a check now, you will get
a tax credit when you file your 2020 return if you qualify. And if you get less than you should now you will
get any additional credit due to you when you file your 2020 return.
Currently unanswered is whether you’ll have to repay any amount of the stimulus check you receive that
you did not qualify for. In 2008 there was no method for paying back a larger check than it should have
been, but we don’t know yet how they will handle this situation for this round of payments.
If you want to see how much you may receive, there are several online calculators. Just remember, most
of these calculators use only your filing status, the number of children under age 17, and your income. So,
use the calculator as a guideline, but remember you may get more or less than you anticipate.
I can’t promise we’ll have all the answers on all the economic incentives, some law and some just
discussion, but we’ll try to help you in any way we can. As always, I am looking for article ideas that you
would like me to cover. If you have an idea for a future article, or just have a topic you would like more
information on, please send me an email.
At Faw & Associates, we are always available to answer any of your tax or financial planning questions.
You can get more information on this or many other topics at our website – www.fawandassociates.com
or you can contact us directly by calling our office at (336) 838-3080. You can also email me at
email@example.com any time with your question or concern.
We are accepting new clients. Currently we are limiting access to our office but call us and we’ll make
arrangements for you to mail or send your information to us electronically.