Economic Impact Payments: who qualifies? How much will you get?
por Jorge Fernández | June 22, 2020 | Insights
You've probably heard that the U.S. government will be sending a $1,200 payment to U.S. citizens to help them cope with the economic problems caused by the COVID-19 pandemic, which has paralyzed a large portion of the country's economy since March.
Congress finally passed the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) at the end of March. It established how this process will be managed through the IRS (Internal Revenue Service), which is the tax collection body in this country, and payments are expected to begin to arrive in mid-April.
Update: By April 15, 2019, the IRS has already started making deposits and a large portion of the population has received this money.
Who qualifies?
Individuals who meet the following conditions qualify: have filed taxes in the U.S. for fiscal year 2018 or 2019; are residents or citizens of this country; have a valid Social Security number and have not been declared dependent on another person's tax return.
"If I don't have a Social Security number, I won't get any payment?"
Unfortunately not, only U.S. citizens and individuals residing in this country who are considered "resident aliens" with a valid Social Security Number (SSN) may be eligible to receive this payment. Those who do not have legal status in the country and declare taxes using an ITIN number are not eligible to receive this payment.
How much will you receive?
If eligible, single individuals who have had a gross adjusted income lower than $75,000 during the last tax year in which they filed taxes (2019 or 2018 if you have not filed your 2019 return) will be awarded $1,200. If you received income above this amount, the payment will be reduced by $5 for every $100 you declared above the threshold, up to a maximum of $99,000. If your income was higher than $99,000 you will not receive any economic impact payments.
For married couples who submit joint statements, these figures will be duplicated: they will receive $2,400 if they had an adjusted gross income of $150,000 or less, and the same payment reduction rule described above will apply up to a maximum of $198,000. If their joint income was higher than this amount, they will not receive any payment. In addition, $500 is allocated for each qualified dependent under the age of 17.
For example, a family of two married individuals, with two children under the age of 17, with an adjusted gross income lower than $150,000, will receive $3,400 of financial stimulus payment ($2,400 for the couple filing together and $500 for each child under the age of 17 who had been declared as dependent on their tax return).
What about the students?
On this matter, there are some issues in the law. If the student is under the age of 17, his or her family would qualify to receive the $500 that corresponds to him or her, for being a dependent on his/her parents' tax return. But many students are over the age of 17 and are still declared dependent on their parents' return, what would happen in this case?
This is where the situation gets complicated: students over the age of 17 do not qualify for their parents to receive $500 per dependent since they are above the age allowed for this payment, but between the ages of 17 to 24, full-time students can still be declared as dependent on their parents' tax return, and one of the requirements to receive the $1,200 financial impact payment is that the person cannot be declared as a dependent on another person's return.
This would leave out any help to those students between the ages of 17 and 24 who are still declared dependent on their parents' tax return. The only students who would receive an economic impact payment are those of legal age who are financially independent and are not declared as dependent on someone else's return.
"Do I have to do something specific to receive my payment?"
No, if you filed a tax return for fiscal year 2018 or 2019, you don’t have to take any action to receive this payment. If you have selected the direct deposit method with the IRS, the money will be deposited into your account automatically. This is the fastest way to receive your payment. If you have not set up this option, the IRS will send you a check that can take weeks or months to arrive. The IRS launched a tool called "Get My Payment" where you can view the status of your Economic Impact Payment and place your bank information to receive direct deposits and avoid any delays with paper checks.
If you must file a tax return and have not yet done so, the IRS strongly recommends that you do so as soon as possible, especially if you are owed a tax refund, these are still being processed in normal timeframes.
"What if I'm a retired person who receives Social Security benefits and doesn't file tax returns?"
Most people who do not file tax returns should not take any action, this includes individuals receiving Social Security retirement, disability (SSDI) or survivor benefits, and individuals receiving railroad retirement benefits. The IRS will automatically deposit the money into their bank accounts if they receive these benefits through direct deposit.
For eligible U.S. citizens or permanent residents who had a gross income under $12,200 ($24,400 for married couples) by 2019 and therefore did not need to file a tax return, the IRS has enabled a portal so you can enter your personal and bank data to receive your economic impact payment.
If you have additional questions beyond what is explained in this post, please contact us at the email address: preguntas@gbsgroup.net, or tune into our live streams on our social networks, every day at 9 AM Eastern Time.
We invite you to visit these official IRS pages where you will find more information: