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What You Should Know About the Coronavirus Stimulus Checks

Posted on Mar. 27, 2020

With the third coronavirus relief package through the Senate and expected to pass the House, the tax rebate check provision in particular has raised a lot of questions.

Most adults with a Social Security number will receive rebates in the amount of $1,200 for individuals and $2,400 for joint filers, plus $500 for each child, according to the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748).

The amounts begin phasing out at incomes of $75,000 and $150,000 for individuals and joint filers, respectively, and $112,500 for heads of household. Checks will be reduced by 5 percent for any income that exceeds the limitation. Individuals with income greater than $99,000 and couples with income greater than $198,000 won’t receive a payment.

The IRS hasn’t yet provided guidance about the stimulus payments. Nicole Kaeding of the National Taxpayers Union Foundation helped Tax Notes answer some questions about how the rebates will work in more specific situations.

I have 5 kids. Is there a cap on the amount I’ll get?

The Senate bill doesn’t have a cap on the amount of money you can receive. Assuming the bill passes the House as is, you will receive $500 for each of your five children, so long as they meet the criteria as defined by the IRS.

What are ‘children’ as far as this is concerned?

The definition for a child will be the same that is used for the child tax credit — a U.S. citizen under the age of 17, claimed as a dependent who hasn’t provided more than half of their own support and has lived with the taxpayer for more than half of the year. Adopted children and foster children are included.

Will I get anything for non-child dependents, like my 20-year-old college student or my 80-year-old parent who lives with me?

Non-child dependents don’t qualify to receive a tax rebate check, and taxpayers who claim non-child dependents won’t receive any additional money for them.

If I don’t file my taxes until July, my payment will be based on my 2018 returns, right?

Yes. Treasury will use either 2018 returns, 2019 returns, or Social Security benefits data to determine the amount of money you will receive.

How will the IRS know where to send my check?

If the IRS has direct deposit information, you will receive payment directly to your bank account. Otherwise, the agency will mail a check to the address found on your 2019 return, or your 2018 return if you haven’t yet filed this year.

I had a baby last year. How will the IRS know to send me the $500 for my child?

The IRS likely won’t know to send you the $500 unless you file and include the child on your 2019 return. However, you would receive credits when filing your 2020 returns next year, either in the form of a refund or a reduction in the amount of taxes you owe.

My child turned 17 in 2019 so I’m no longer eligible for the child tax credit. If I don’t file and the IRS uses my 2018 return for my direct payment, will I get the extra $500 for my child?

This is an open question that will require guidance from Treasury. Under the bill, the child wouldn’t qualify for the extra $500, but it’s still unclear how Treasury plans to handle those types of situations.

What happens if I already received my payment, but I file an amended return that would have resulted in a larger payment?

The way the bill is written, the math will always work in the taxpayer’s favor. “If they send you too much money, you can keep it,” Kaeding said. “If they don’t send you enough, they will send you more.”

Can payments be clawed back if the IRS later discovers its information was inaccurate or its interpretation of how to treat a situation changes?

See previous answer.

I’m a recent college graduate who is now an independent but was claimed as a dependent by my parents on their 2019 return. Will I receive a check?

This situation will be reconciled on 2020 returns. If you are no longer a dependent and file as an independent for 2020, you will receive the credit next year.

Have other questions that weren’t answered here? Send a note or tweet to @_AlexisWasHere.

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