Article by: Kelly Ann Smith Forbes Magazine
COVID-19 continues to wreak havoc on the world’s peoples and economies. In the United States, as businesses shut down or pare back, millions of workers have already been laid off, leaving many to wonder how they’ll pay their bills.
One much anticipated provision of the final stimulus bill is the checks that will be sent to most Americans. These one-time payments will be sent to eligible individuals, which means anyone who is a legal resident, is not claimed (or eligible to be claimed) as a dependent on someone else’s tax return and doesn’t earn too much.
American adults will be granted the following one-time payments:
$1,200 payment to individual taxpayers
$2,400 payment for married couples filing jointly
An additional $500 per qualifying child under the age of 17.
Upper income folks aren’t eligible for the checks; the payments start to phase out for single filers with adjusted gross income above $75,000; married couples filing jointly with AGI above $150,000; and heads of household (that’s a single person with dependents), with AGI above $112,500. Stimulus amounts will be paid out based on 2019 income (or 2018, if an individual hasn’t yet filed their 2019 tax return).
Those who receive Social Security retirement or disability benefits but earn too little to have to file returns, will also receive stimulus checks, based on the information sent to the IRS on 2019 forms SSA-1099 and RRB-1099 . (College students and older teens who are dependent on their parents for more than half their support aren’t eligible for the checks, even if they earn a little money on the side.) Use this calculator to get an idea of how much stimulus money you’ll need.
Technically, the checks are a 2020 tax credit. So what if your year-to-year income changes? Suppose you earned too much in 2018 and 2019 to be eligible, but your income dropped with the economy in 2020? In that case, when you file your 2020 taxes in 2021, you’ll be eligible for the payments. It appears that individuals who qualify for the stimulus based on their 2019 returns (or their 2018 returns, if they haven’t yet filed for 2019), yet would not qualify based on their 2020 income, do not need to pay any of the stimulus amount back.
As of this date, the final rules have yet to be written or are still under interpretation and subject to change.