Tax Update: Coronavirus Stimulus Payments
The government has established a new relief stimulus package that is set to help U.S. citizens that have been affected by COVID-19. The White House is aiming to begin sending out checks within the next few weeks, but how much you are given is going to be determined by your most recently filed tax return or information from the Social Security Administration. You must have a Social Security Number (SSN) in order to receive a check. If you have adopted children, you may use their adoption taxpayer identification if they do not have a SSN.
The standard payment per single filer is $1,200, and $2,400 per married couple filing jointly. Families with children who qualify for the Child Tax Credit (dependent children who live in the household for more than six months under age 17) will also receive an additional $500 per child.
There is a phase-out rule depending on your adjusted gross income (AGI). The threshold is $75,000 for single filers, $150,000 for married filing jointly couples, or $112,500 for heads of households. If your AGI is over the threshold in whichever category you fall under, your check will decrease by $5 for every $100 you are over that threshold. If your AGI reaches $99,000 if you’re a single filer, $198,000 if you’re married and filing jointly, or $146,500 if you file as the head of the household, then you are no longer qualified to receive a stimulus package.
The additional child payments are not subject to a phase-out.
The relief payments will not be subject to federal income tax, but they are being treated as an advance of refundable credits. When you go to file your 2020 taxes, the IRS will compare the amounts and everything should balance out. As of now, there isn’t a definitive statement about what would happen should an overpayment occur, but it assumed the IRS won’t tax any overpayments.
More guidelines about this relief package and what else is included is expected to come soon, and we will update you again when we receive that information. Please do not hesitate to contact us if you have any questions.