Delayed Stimulus Payments, Income Taxes, and Continual IRS Changes, Oh My!
Kelli Peterson answers your frequently asked questions around stimulus payments, including, “Is my stimulus payment taxable?” and “I received a payment for a deceased taxpayer. Now what?!”
It seems every day there is something new coming from the Department of Treasury (better known as the IRS). With so much fluctuating information and the news media barely able to keep pace, taxpayers are left in a world of ambiguity regarding their stimulus checks. Tax professionals are being called upon to relay information to their clients as to where their stimulus check is or why they haven’t received one yet. Let’s dive into a few details.
Why haven’t I received my stimulus payment yet?
First things first. How much income did you report on your 2019 return (if you already filed) or your 2018 return (if you haven’t filed your 2019 return yet)? If you are single and your Adjusted Gross Income (AGI) is above $99,000, you are not eligible for a stimulus check.* If you are married filing jointly and your AGI is above $198,000, you are not eligible for a stimulus check.*
*If you have a child/children, your stimulus check could be an additional $500 per qualifying child.
If you passed this first hurdle and have yet to receive your stimulus check, you can go to the IRS website and check the status of your payment.
As of May 20, the IRS is showing a “mail date” of when your check will be sent via U.S. Mail. The IRS recently announced they may be sending a prepaid Visa debit card rather than a check. Taxpayers can go to EIPcard.com for more information on how to use this card.
If you did not pass the income test, there could still be some tax planning strategies available to you. Reach out to your financial advisor today to discuss these options.
Is my stimulus payment taxable?
No! Finally, some good news! The IRS has stated that those who do receive a stimulus check are not required to report this as income on their 2020 tax return. If you receive a check now, it will not affect your refund or amount due next year. Keep any correspondence you do receive, as there may be a reconciliation required on your 2020 tax return.
I received a payment for a deceased taxpayer. Now what?!
Amongst all the disruption, the IRS inadvertently released stimulus checks to deceased persons. In its May 11, 2020 update, the IRS commented that no, deceased persons are not eligible for a stimulus check, and if one was received, it should be mailed back to the IRS. If the payment was a direct deposit, the IRS is requesting a personal check be written, with a brief explanation as to why it is being returned.
The IRS has kept a fairly detailed “Frequently Asked Questions” page to assist taxpayers and tax professionals alike. However, the overall feeling here is that there is no rhyme or reason as to why some people received their stimulus payments as early as April 15 and others are just now seeing their payment being mailed to them. Be sure to check the status of your payment if you have not received it yet.
Your taxes are as unique as you are! Knowing what options you have for tax planning can not only help you now, but in the long-run as well –maximizing the amount you pass on to your heirs or charity! Talking with your financial advisor now can help you get your 2020 taxes sorted out before it’s too late!
Source: https://www.irs.gov/coronavirus/economic-impact-payment-information-center#more
Kelli M. Peterson
Tax and Training Manager