Stimulus checks are being given out to people in a historic move by the government to help aid the battle against coronavirus. However, taxes are going to play an essential role in this transaction between the state and the people. Read further to know-how.
What Are Stimulus Checks?
The Senate had unanimously passed a $2 trillion economic rescue plan this week that is going to offer financial assistance to tens of millions of American households that are being affected by the coronavirus.
Stimulus checks are checks given out by the US government to taxpayers to help them boost their spending power and initiate activities in the economy. These are either mailed to the taxpayers, or their tax filing is attached later with a tax credit.
The last time stimulus checks were used was when the economy faced a great recession in 2008 and 2009. A bill was presented in March 2020, by the US Government which passed the distribution of these stimulus payments to provide relief during this pandemic.
How Are Taxes Involved?
After the stimulus measure is passed by the house and made into a law, distributions will be made through the IRS, which will use the 2019 taxpayer forms to determine how much amount a person should be receiving through their checks and where this amount should be sent. If the 2019 taxes are still waiting to be filed, the IRS will use information from the taxpayers' 2018 forms.
Thus it is important to make sure that your taxes are filed.
This step should be especially significant to low-income Americans who do not find the need to file taxes. In that case, you will still need to fill up a form. People who receive nontaxable income will still get checks.
It's not important that you download any special software or use a tax preparer. The IRS will provide you with two paths for filing options, one for people who are earning under $69,000 and the other for those making above. Both can be found on the site- IRS.gov.
People who make up to $75,000 a year will receive checks up to $1200, which will be coupled by an additional $500 for every child in the household. The payments will decrease progressively for people making more than $75000, up to $99,000.
Americans will start getting checks in the next 3 weeks, as said by Treasury Secretary Steven Mnuchin on Thursday. The last time these checks were distributed in 2009, the IRS took as much as 3 months.
There is some opinion among experts that due to budget cuts and obsolete technology, the IRS might take months to distribute these payments.
"I don't think any of the policymakers have given any thought to the practical implications of actually doing this. The IRS doesn't have the resources to do it," Howard Gleckman, a senior analyst at the Urban Institute's Tax Policy Center, said to Reuters.
People who were going to receive paper checks and have moved since their last returns were filed, need to submit a form for their change in address. This might take up to six weeks to be processed.
Taxpayers will get their checks faster if they have signed up for direct deposit with the IRS. In order to register for direct deposit, people need to indicate it as the method of refund on their tax forms.
There is a special landing page for coronavirus on the IRS website, which will be updated with more information as soon as it is available. Currently, the page says- "Stimulus payment checks: No information available yet. No sign-up needed. Instead of calling, please check back for updates."
According to the bill- "For the vast majority of Americans, no action on their part will be required in order to receive a rebate check. This includes many low-income individuals who file a tax return in order to take advantage of the refundable earned income tax credit and child tax credit."
If you have already filed the 2018 and 2019 taxes and your tax information is accurate up to date, then there is no need for you to do anything.
Commonly Asked Questions
Where Is My Stimulus Refund?
Taxpayers who do not have internet access can check the status of their refunds through calls. Call the IRS TeleTax System at 800-829-4477 and the IRS Refund Hotline 800-829-1954. In case you do not get a date for your refund, you should wait until the next week before you call back.
How large are the payments going to be?
Most adults will receive as much as $1200, although some will have to face a loss. For children who are aged 16 or under, payment will be heightened further by $500.
Will I get the full amount?
The amount you get through stimulus checks largely depends on your income. Single adults who have social security numbers and their gross income comes to $75000 or less get the full amount from the stimulus checks. Married couples without children who earn up to $150,000 or less will receive a sum total of $2,400. The taxpayers who have filed as the head of the household will be entitled to the full payment if they earn $112,500 or less.
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