We recognize that the constantly changing COVID-19 situation is an unprecedented time for everyone. A time for many that is filled with uncertainty. Our thoughts go out to each and every one of you.
I want you to know that during these challenging times we remain committed to delivering the critical and up-to-date federal tax law information you depend on.
The “too long, didn’t read” version: Tax returns and payments are due July 15. Some states have different filing dates. Stimulus payments will start to go out to those who filed a 2018 or 2019 tax return which had a refund and had a bank account for direct deposit within three weeks. Check your “adjusted gross income” on your last filed return to see if you qualify. If you do, but the IRS does not have your account info, please WAIT for further instructions on providing the IRS with direct deposit information. We will provide an update as soon as it comes available. Be very mindful of scams and DO NOT enter your bank information without confirming the site.
Today we want to make you aware of the following important developments:
- The tax deadline to file AND pay has been moved to July 15, 2020. If you have already filed your 2019 return, it cannot be unfiled. If you have not yet filed, you can delay filing. If your return is already in process, or you would like to prepare your return anyway, we are open and ready. We can prepare the return and set up a delayed payment date if you owe any tax up to July 15.
- If you haven’t filed but you are due a refund, it is a good idea to file now. There is no reason to delay your refund.
- Many states (including DC) [AL, AR, AZ, CA, CO, CT, DC, DE, GA, IL, IN, KS, KY, LA, MA, ME, MD, MI, MN, MO, MT, NC, ND, NE, NM, NY, OH, OK, OR, PA, RI, SC, TN UT, VT, WI, WV] and USVI have changed from 4/15 to 7/15 filing and payments deadline for coronavirus pandemic. Eight states [IA (7/31), HI, (7/20), ID (6/15), NH (6/15) MS (5/15), OR (4/30), VA (6/1), WA (6/15)] and Puerto Rico (6/15) changed to other filing and payments deadline. One state with a personal income tax (NJ) has not yet provided guidance on filing and payment extension (note – NJ has passed legislation but not yet signed by the Governor to provide extension to 7/15.)
Stimulus (CARES Act)
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 is eligible for the economic impact payment?
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
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. Parents also receive $500 for each qualifying child.
How will the IRS know where to send my payment?
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 am not typically required to file a tax return. Can I still receive my payment?
Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.
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.
I need to file a tax return. How long are the economic impact payments available?
Economic impact payments will be available throughout the rest of 2020.
Am I eligible if I live abroad?
All citizen taxpayers who meet the adjusted gross income limitation and have valid social security numbers and a filed tax return are eligible. Having utilized the Foreign Earned Income Exclusion is not a barrier to receiving the economic impact payment.
My kids don’t have social security numbers. Do they qualify?
No. Only dependents with social security numbers or adoption identification numbers qualify for additional payments.
What If I Had a Child in 2019, But I Haven’t Filed My 2019 Return Yet?
If you had a baby last year, but you haven’t filed your 2019 return, you might be worried about losing $500 because the IRS doesn’t know about your new bundle of joy. That actually could be a problem—you won’t get that extra $500 if you don’t file before the IRS starts processing your payment. However, if you have a child now that isn’t reflected on your 2018 return, you’ll be able to account for him or her when you file your 2020 return next year (you’ll get an extra $500 credit then). So, while you won’t get that extra $500 in your stimulus check now, you’ll still get it later.
In fact, if your stimulus check is less than what you’re entitled to receive for any reason, you can make up the difference with an extra tax credit on your 2020 return.
Will “Nonresident Aliens” Get a Check?
Nonresident aliens are not eligible to receive a stimulus check. Generally, you are a nonresident alien if you’re not a U.S. citizen, you don’t have a green card, and you are not physically present in the U.S. for the required amount of time.
How Many Stimulus Checks Will I Get?
You’ll get just one payment. Earlier proposals called for multiple checks. One plan put forth by a group of Democratic Senators even required quarterly payments to Americans until the crisis ends. However, the law signed by President Trump only authorizes a single payment.
Will the Money I Get Now Be Taxed Later?
No. The check you receive is really just an advanced payment of a tax credit for the 2020 tax year. As such, it won’t be included in your taxable income.
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.
SCAMS
If you receive a phone call, text, or email asking for personal details or money in order to get your stimulus check, it’s a scam. The IRS will not call, text, email or otherwise contact you for information about your stimulus payment. The IRS only sends correspondence via mail.
If you receive a ‘stimulus check’ in the mail now, it’s a fraud – it will take the Treasury several weeks to mail those out. If you receive a ‘stimulus check’ for an odd amount (especially one with cents), or a check that requires that you verify the check online or by calling a number, it’s a fraud.
Keep an eye out for phishing attempts as well. If you get an email or text with a suspicious link, do not click on it. If you think you’ve been contacted by a scammer, file a complaint with the FBI and/or the Federal Trade Commission (FCC) immediately.
Please keep in mind this is a fluid situation and we are rapidly receiving more clarification from the IRS regarding deadlines and stimulus payments. We will keep you updates as news develops.
Contact us if you have questions and stay safe.
Sincerely,
Cindy DuChateau – cindy@bnctax.com
Christie DuChateau – christie@bnctax.com
And the entire BNC Tax Team