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Stimulus Payment – What You Need to Know

Stimulus

Will the stimulus payment impact my refund next year?

The stimulus payment is an advance of a new/additional credit, it will not reduce the normal amount you would receive as a tax refund.

What happens if your income increases and you qualify for less?

You will not have to pay back the difference (only those who are ineligible in the first place are asked to return payments). The payments are also not taxable, so the only way they can affect your 2020 taxes is if you did not receive the full amount you were entitled based on 2020 income.

Did you receive a stimulus payment in error?

In recent weeks we have received calls from clients regarding stimulus checks that have been sent in error. The IRS recently issued guidance on how to return those payments. More often than not, those stimulus payment errors have been received for a spouse or relative that passed away in 2018 or 2019.  Some have also received payments for children over age 16 who were claimed as dependents (and thus not eligible). The IRS has now updated their FAQ section on their website with instructions on how to return these payments.

“A payment made to someone who died before receipt of the payment should be returned to the IRS by following the instructions in the Q&A about repayments.  Return the entire payment unless the payment was made to joint filers and one spouse had not died before the receipt of the payment, in which case, you only need to return the portion of the payment made on account of the decedent.  This amount will be $1,200 unless adjusted gross income exceeded $150,000.”

If you received a paper stimulus check and it has not yet been deposited, taxpayers are instructed to write “VOID” on the back and mail it to your regional IRS location (addresses are listed on the website).

If you received payment via direct deposit, or you received a check and already deposited it, taxpayers are instructed to write a personal check or money order payable to the U.S. Treasury, write “2020EIP” in the memo along with the Social Security number of the ineligible recipient.

Taxpayers should also include a note on returned checks or personal check payments explaining the reason they are returning the stimulus payment.

Click here for instructions from the IRS on how to return payments.

What if you didn’t receive the full amount?

While some are receiving payments when they are not eligible, others are not receiving the full amount.  Technically the payments are an advance rebate of a new credit on your 2020 income taxes.  This means if you did not receive the full amount in error, or you had a change in dependents that was not reflected on your most recently filed tax return; you will receive the additional amount of credit when you file your 2020 taxes. If you did not qualify for the stimulus payment or received less than the full amount based on your 2018 or 2019 tax return and your income decreases in 2020, you will also receive the additional you qualify for based on 2020 income. Because the stimulus payment is an advance of a new/additional credit, it will not reduce the normal amount you would receive as a tax refund.

Haven’t received your stimulus payment yet?

Taxpayers who owed on their most recently filed tax return could provide the IRS with direct deposit information through their portal up until last week.  As that deadline has now passed, those who have not yet received their payment will be receiving paper checks.  Taxpayers can still use the portal to track when they will receive their payment.  If a payment date has not yet been scheduled, continue to check the portal and you should see a date within the next few weeks.

You can find the IRS payment tracker here.

If you have questions about your Stimulus Payment, feel free to contact our experts!

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