This article was written and produced by Heather Buske, Manager at The Bonadio Group. Looking to get in touch with Heather? Reach out today: hbuske@bonadio.com.
Economic Impact Payment:
The Internal Revenue Service has recently started issuing the highly publicized stimulus payments, known as Economic Impact Payments. Many Americans should have noticed a deposit to their bank account this past week. These payments were part of the 2.2 trillion-dollar CARES Act that was passed in March to help stimulate the economy as the country wades through the coronavirus pandemic.
Let’s have a quick refresher on qualifications to receive the payment. Eligible individuals must have a social security number, cannot be nonresident aliens and cannot be a dependent of another individual. Each qualifying individual with adjusted gross income (AGI) of $75,000 or less ($112,500 or less for head of household), will receive a $1,200 stimulus and an additional $500 for each qualifying child. Eligible individuals who file a married filing joint return with an AGI of $150,000 or less, will receive a $2,400 stimulus and an additional $500 for each qualifying child.
A qualifying child is the taxpayer’s son, daughter, stepchild, adopted child, foster child, sibling, stepsibling, or a descendant of any of them who is under 17 at the end of the tax year and who lived with, and was supported by, the taxpayer. For example, a married filing joint couple with AGI under $150,000 and three qualifying children should receive a payment of $3,900. The stimulus is reduced by $5 for every $100 the individual is over the applicable threshold. Assuming an eligible individual has no qualifying children, if their adjusted gross income is $99,000 or greater ($198,000 for married couples and $136,500 for head of household), the stimulus payment is phased out completely.
So how and when do you receive your economic impact payment? As mentioned earlier, many individuals have already received it without lifting a finger. The first wave of payments started this week and automatically went to eligible individuals that have filed a 2018 or 2019 tax return and had their direct deposit information on file with the IRS. In addition, per the IRS, automatic payments will start to be distributed soon to individuals that receive Social Security, Railroad Retirement, or disability benefits and do not have a filing requirement.
If you have yet to receive your payment, you can visit the following IRS website, Track Stimulus Check, to check your payment status and confirm whether the payment should be made by direct deposit or check. If a taxpayer prefers to receive the stimulus check via direct deposit but did not provide the IRS with direct deposit information on their 2018 or 2019 return this tool can also be utilized to update direct deposit information. The IRS will start processing check payments on April 20 but per a previous statement, it can only process up to 5 million checks per week. Due to that statement, it is possible that it could take weeks or months for individuals to receive their payment by check. Therefore, it is highly recommended to provide banking information as individuals will receive their payment quicker through direct deposit.
For individuals who did not and were not required to file an income tax return for 2018 or 2019, the IRS has officially launched a free tool, “Non-Filers: Enter Payment Info Here”, to assist non-filers in providing the necessary information to receive their economic impact payment. The process will start by creating an online account with Free File Fillable Forms, an IRS certified partner. In order to complete the application, you will want to have the following information handy:
- Full name, current mailing address, and an email address.
- Date of birth and Social Security number.
- Bank account number, type, and routing number, if you have one.
- Driver’s license or state-issued ID, if you have one.
- For each qualifying child: name, Social Security number, or Adoption Taxpayer Identification number and their relationship to you or your spouse.
- Identity Protection Personal Identification Number (IP PIN), if you have one.
Once submitted, the IRS will use this information to confirm eligibility, calculate the payment amount, and send the payment through direct deposit or check.
For security reasons, the IRS will mail a letter within 15 days of payment to each recipient that acknowledges how the payment was made and the amount. If you have any concerns about whether the correspondence you have received from the IRS is legitimate, please visit IRS.gov or contact us at The Bonadio Group for additional guidance. It is important to remember that the IRS will not call, text, or email you; even regarding economic impact payments.
Extension of 2020 Second Quarter Estimated Tax Payments:
Previously, the Department of Treasury and the IRS announced that tax filing deadlines, including the remaining tax liability associated with a 2019 tax return, as well as the 2020 first quarter estimated tax payments, were automatically extended from April 15, 2020, to July 15, 2020. Recently, the IRS has continued to extend more deadlines, which allows 2020 second quarter estimated tax payments originally due June 15, 2020 to be paid on July 15th, 2020. Therefore, individual federal income tax payments associated with the remaining 2019 federal tax liability (assuming appropriate 2019 estimated tax payments and withholding tax payments were made) and the 2020 first and second quarter federal estimated income tax payments can be paid on July 15th, 2020, without incurring interest or penalties.
Please make sure you are consulting with your professional service team members at The Bonadio Group or your personal tax advisor on state due dates as not all states have conformed or may have set different filing and payment deadlines.
Contact your Bonadio Tax Team for more information.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We therefore make no warranties, expressed or implied, on the services provided hereunder.
