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Information About the Stimulus Package of 2020!

The Trump Administration and Congress have just passed a law that will infuse the economy with cash to help offset the devastating economic effects of the Corona Virus Pandemic. There are a lot of unanswered questions about these payments. Here are a few answers to some of the questions we believe most taxpayers will have. :

How much will we all get?

The basic amount will be $1,200 per adult plus $500 for every dependent child under age 17 at the end of 2019. 

Stimulus Benefits will be available to taxpayers whose Adjusted Gross Income is less than

Single & Qualifying Widow(er)     $   75,000

Head of Household                      $ 112,500

Married Filing Jointly                    $150,000

If your income exceeds these amounts the stimulus benefits will be reduced and eventually phased out and no stimulus benefits will be available for taxpayers whose Adjusted Gross Income exceeds

Single or Qualifying Widow(er)     $100,000

Head of Household                      $136,500

Married Filing Jointly                    $198,000

When will we get the Money?

The IRS plans to begin sending money the week of April 6th. It would be reasonable to assume that not all checks will go out on that date. The last time the governmnet tried something like this the checks were sent in batches over a period of eight weeks. I'm sure the IRS will want to get the money out quicker than that, but exactly how long it might take is anyone's guess at this point. 

How will we get the money?

The IRS has said they will be distributing the money via Direct Deposit as long as they have your direct deposit information on file. 

Will the Money I Get Now Be Taxed Later?

The check you receive is really just an advanced payment of a tax credit for the 2020 tax year. As such, it won't be included in your taxable income.

Will the IRS Take My Check If I Owe Back Taxes?

Stimulus money is generally not subject to reduction or offset to pay back taxes or other debts owed to the federal government.

What If My Check Doesn't Arrive?

Within 15 days of mailing your check (or directly depositing it into your bank account), you will receive a notice in the mail indicating the method of payment, the amount of payment, and an IRS phone number to call if you didn't receive your payment.Both the payment (paper check) and notice will be mailed to your last known address the IRS has on file. If you have recently moved, you should file a Form 8822 with the IRS and a change of address notice with the U.S. Postal Service. This will ensure correspondence and payments from the IRS will be sent to your new address.

What happens to people who earned too much in 2018 and 2019 but now lost their job?

This is a really tough situation. Unfortunately, these workers are not eligible for $1,200 checks right away. They would get the rebate when they file their 2020 taxes next year. Treasury may create a program to get these people money sooner, but nothing has been announced yet.

If I owe back taxes, will my check be reduced? 

No. At this point, the only reason a check would be reduced is if past child support payments are due and the amount has been reported to the federal government. This doesn't mean there may not be changes to this, but the primary purpose of this legislation is to get money into people's pockets NOW to support the economy and to help people stay afloat financially. 

I have a lot more questions. What should I do?

First and Foremost, Be Patient! The ink on this legislation isn't even dry yet, and the Treasury and IRS are still figuring out a lot of the administrative details. The IRS has developed a website www.irs.gov/coronavirus where more information will eventually be posted. For now, there is no information available beyond what is in the legislation.  You can always check back here, as we will attempt to post updates as we receive them!

Here are some other provisions included in the Stimulus Package!

  • Tax credit rebates of up to $1,200 per individual and $500 per child that are phased out for taxpayers with AGI over $75,000 ($150,000 MJF and $112,500 HOH) and will be “rapidly advanced;”
  • Deferral of 50% of an employers’ payroll tax deposits for 2020 (with 50% of deferred amount due by December 31, 2021, and 50% due by December 31, 2022);
  • A refundable employer retention credit equal to 50% of qualified wages against quarterly employment taxes, to offset up to $10,000 of wages paid per employee in 2020;
  • The reinstatement of NOL carrybacks for the 2018–2020 taxable years, and repeal of the 80% taxable income limitation for the 2018–2020 taxable years;
  • A TCJA technical correction that classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactive as if it was included in the TCJA at the time of enactment;
  • Penalty-free withdrawals of tax retirement funds of up to $100,000 (income recognized over a three-year period);
  • A temporary waiver of RMD requirements in 2020;
  • Increased individual and corporate charitable contribution deductions for 2020;
  • The deferral of excess business loss limitations until 2021;
  • Deferral of an employer’s 2020 minimum contributions to its single-employer defined benefit pension plan until January 1, 2021;
  • An increase in the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year;
  • An exclusion from income for employer-payments made on employee student loans paid before January 1, 2021;
  • The acceleration of the corporate credit for prior-year minimum tax liability, allowing 100% of the credit to be claimed in 2019 (2018 at the election of the taxpayer); and
  • A COD exclusion of small business Payroll Protection loans forgiven under the Act.

Rohnert Park, CA Income Tax, Accounting, Express Income Tax Services

Express Income Tax Services | 6010 Commerce Blvd. Suite 142, Rohnert Park, CA 94928 | Phone: (707)584-8989 | Fax: (707)595-4725 | info@1040fast.com