Home Guides & Resources chevron_right Investing CARES Act Provides Direct Payments to Taxpayers Published April 24, 2020 Continuing to unpack the CARES Act, we will be reviewing one of the most-talked-about parts of the relief package—the provision to send direct payments to taxpayers either by direct deposit or by paper check. Here are four things to know about how this part of the bill is working: Eligibility: Congress has authorized one-time payments of up to $1,200 per individual taxpayer, along with an additional $500 for each child under 17 they claim as a dependent. “Up to” is, however, a key phrase. Taxpayers whose adjusted gross income (AGI) was less than a certain threshold will be entitled to the full benefit ($75,000 for single filers, $112,500 for those filing as heads of households or $150,000 for married couples filing jointly). Payment amounts are gradually reduced at higher levels of income until they phase out altogether for higher earners. Here’s how to estimate how much you are eligible for: Start with the full payment—$1,200 as an individual or $2,400 for a married couple filing jointly. Then, for every $100 in income above the threshold, your payment is reduced by $5. If you earn more than $99,000 as a single filer (or $198,000 as a couple), you won’t be receiving a check. Not Taxable: The money is considered an “advance refundable tax credit.” In English, it’s a refund on taxes to be paid in 2020—similar to measures passed by Congress in response to the 2001 and 2008 recessions. Since you haven’t paid your 2020 taxes yet, the IRS will be using your 2019 return to determine whether you’re eligible and for how much. If you haven’t filed for 2019 yet, the IRS will rely on your 2018 return instead. Keep the Extended Filing Deadline in Mind: The extended filing deadline of July 15 and the new advance credit may impact your tax strategy. If you’d be eligible for a payment based on your 2018 income but ineligible based on your 2019 income, you may wish to delay filing your 2019 return until after the payments are made—the CARES Act does not contain a provision to recoup any over-payment. If your 2019 income was below the threshold while your 2018 was above, consider filing as quickly as possible to receive the funds. Visit IRS.gov: Some taxpayers have already begun to receive their direct payments. If you have not, or if you are unsure whether you’re eligible to receive a payment, visit the IRS’ “Get My Payment” page. After entering some personal information, the website will tell you whether you are eligible and the status of your payment. You’ll also be able to confirm if the IRS has your bank account information on file. (We recommend providing the IRS with your bank account information if you can do so, as paper checks will be slower than direct deposits.) Once you enter your information, the IRS says you should receive a direct deposit within several days if you’re deemed eligible. Not all payments have been processed yet—if the system doesn’t have your information, continue to check back once per day. As always, if you have any questions about your specific situation and whether you are eligible to receive a payment, please contact your wealth management team. We will be happy to assist. This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs. Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be viewed as a recommendation to buy, sell or hold any of them. © 2020 Adviser Investments, LLC. All Rights Reserved. Tags: coronavirus