Coronavirus Payments: How Much Will I Get?

The anticipated economic stimulus plan will provide direct payments to millions of Americans, but many people have questions: How much they will receive? How will payments be determined? How will payments be sent/received? When will payments be sent? How does existing tax debt impact the eligibility for a payment? While the situation is still developing, this post attempts to answer some of these common questions based on the bill recently unanimously passed (96-0) by the Senate:

1. “I am married, with two dependent children under 16, and a combined income of less than $150,000. How much will we receive?”If you filed jointly and your adjusted gross income is less than or equal to $150,000, you and your spouse will receive a joint stimulus payment of $2,400 plus $500 per dependent child under 16. In total, you would receive a payment of $3,400. The amount of the payment phases out after combined AGI exceeds $150,000 up until $198,000. If your joint AGI exceeds $198,000, you will likely not receive a stimulus payment. For single taxpayers who make under $75,000, they will receive a $1,200 payment. This amount phases out until a single taxpayer exceeds $99,000 of AGI, at which point, they will not receive any payment. Different income limits apply to taxpayers claiming head of household status (eligibility phases out between $112,500 and $136,500). Treatment of taxpayers filing as married filing separately isn’t specified in the bill, but I suspect they will be subject to the same limits that apply to single filers.
2. “What is my adjusted gross income?”Your adjusted gross income or “AGI” is calculated after subtracting from your income (i.e. wages, dividends, interest, self-employment earnings) things like contributions to retirement (traditional IRAs and 401ks) and health savings accounts. Your AGI can be found on line 7 of your 2018 Form 1040 and line 8b of your 2019 Form 1040. Those taxpayers who have maxed out on tax-deferred accounts like traditional IRAs, 401ks, and HSAs may see an added bonus this year in the form of the stimulus payment, as they will benefit from having a reduced AGI.
3. “Will they use my 2018 or 2019 AGI to determine my eligibility?”If you have already filed your 2019 tax return, your AGI for that year will determine whether you receive a stimulus payment. If you haven’t filed your 2019 return yet, they will look at your 2018 AGI. The bill indicates that those who filed their 2019 returns and were ineligible for a payment based on that income, could still become eligible to receive a refundable tax credit on their 2020 tax returns if they experienced a drop in income. It remains to be seen how all of this will play out. Also, it is unclear whether taxpayers who did not file tax returns for either year will be treated. The bill indicates that people who didn’t file returns for these years but who received Social Security benefits will receive the payments, but non filers who didn’t receive Social Security benefits likely will not receive the payment unless they file their tax returns prior to the IRS processing these payments. As such, it’s a good idea to get at least one of your 2018 or 2019 tax returns filed immediately if you have not done so already.
4. “How will I receive my payment?”If you received a tax refund via direct deposit in the last two years, the IRS will use that banking information to remit payment to you electronically. If you did not receive a refund via direct deposit, then the IRS will most likely mail you a check to your last known address (typically the address on your last filed tax return). If you moved since filing your last tax return, you should immediately file a change of address form with the IRS, available here. It’s always a good idea to file this form anytime you move in order to avoid missing notices from the IRS.
5. “If I owe the IRS back taxes, will I still receive the stimulus payment?”You should, assuming you filed your 2018 or 2019 tax return (see 3 above). The Senate bill specifically states the stimulus payments “shall be” exempt from the offset provisions that typically allow the IRS to offset preexisting tax debt by intercepting tax refunds or other government payments.

We hope you found this information helpful. This situation is rapidly developing and we will try to post updates as information changes.

Disclaimer: This article does not constitute tax or legal advice, but is for informational purposes only. Each person’s situation is different and you should consult with your own CPA or tax attorney regarding your situation and how the Coronavirus stimulus may impact you.