Myth Busting – 2020 Economic Impact Payments
Economic impact payments included in the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act began rolling out to direct deposit accounts as early as April 11.
By mid-month, an estimated 80 million people should have received their direct deposit payments, according to U.S. Department of the Treasury. The first physical checks will be mailed out the beginning of May.
There are a lot of questions and myths floating around about these checks. We attempt to answer some frequently asked questions below and bust some myths.
Let’s bust some common myths floating around about the 2020 Economic Impact Payments.
Frequently Asked Questions About the Economic Impact Payments
Who is eligible for this economic impact payment?
The economic impact payments will go to anyone who is a U.S. citizen or resident alien who has a valid Social Security number, can not be claimed as a dependent of another taxpayer, and meets the following income requirements:
If your Adjusted Gross Income (AGI) is at or below:
- $75,000 for individuals
- $112,500 for head of household filers and
- $150,000 for married couples filing joint returns
People will receive a reduced payment if their Adjusted Gross Income is between:
- $75,000 and $99,000 if their filing status was single or married filing separately
- $112,500 and $136,500 for head of household
- $150,000 and $198,000 if their filing status was married, filing jointly
What does Adjusted Gross Income mean?
Let’s start with “gross income.” Your gross income is your total pay from your employer before taxes or other deductions. The term “Adjusted Gross Income” goes a step further. It is your total income (wages, dividends, capital gains, retirement distribution, etc.) minus certain payments made for the year, such as contributions to retirement funds or health savings account, or student loan interest payments.
You can find your Adjusted Gross Income or AGI on your income tax return. For the 2019 tax return, your AGI is on line 8b on Form 1040.
What is a refundable tax credit?
The economic impact payment is considered a “refundable tax credit.” If you meet the income requirements for this payment, you are eligible for the full amount regardless of how much you may owe or pay in taxes. The term may confuse some because it uses the word “refundable,” but the payment is NOT an advance on your next tax refund.
Where can I track my payment status?
The IRS has created a quick tool to allow you to check on your economic impact payment. You will be asked for your name, social security number, address, and date of birth on this secure website. It will tell you if your payment was sent to your bank or will be distributed by mail. You can find this tool at https://www.irs.gov/coronavirus/get-my-payment.
Will the IRS ask for money back if there’s an overpayment?
If someone contacts you about being overpaid – scam alert! The IRS will not send you an overpayment nor make you send the money back in cash, gift cards, or a money transfer, according to the Federal Trade Commission. The IRS won’t text you or email you to verify your payment or deposit information. Read the FTC’s scam alert.
When are my income taxes due this year?
The federal government and state of Arkansas have pushed back income tax return filing dates from April 15, 2020 to July 15, 2020.
What is the correct name for this payment?
The IRS has named the one-time payment an “economic impact payment” and this is the language that will be on the bank deposit or mailed check. The language in the C.A.R.E.S. Act refers to the check as a “rebate for individuals." The terms “stimulus benefits” and “stimulus payments” have been popularly used in the media and online as well as "stimulus checks." All the names have been used interchangeably but these checks can be accurately described as financial assistance payment to eligible individuals and should be called by the IRS term “economic impact payment."