Here we are, day 91 of 2020, in a reality that seems stranger than fiction; not only are we being asked to stay away from people, “Tiger King” is trending on Netflix, and our kids’ dream of school being closed has come true. In this bizarre new reality, the constant uncertainty and rapidly evolving economic changes are a source of great confusion. Today, I hope to clear up a few items for everyone. I can’t tell you when you will be able to go get a drink at your favorite bar or if the best restaurant patio will be open in the next few weeks, but I can give you some details that will help clear up the news reports regarding the Stimulus payments, Federal Unemployment, and possible grants and loans for your small business to help ensure your doors are open when this is all over.
Let’s start with the stimulus payment. Section 6428(a) of the recently passed CARES Act creates a new tax credit that is available for advanced payment to taxpayers who qualify. Qualifying for a “stimulus” payment is relatively straight-forward, by IRS standards.
We start with income limitations:
Married Filing Joint
AGI under $150,000 You qualify for the full $2,400 ($1,200 taxpayer & spouse)
$150,001 & $198,000 reduced by 5% of the amount over $150,000
over $198,000 you no longer qualify
Head of Household
AGI under $112,500 You qualify for the full $1,200
$112,501 & $136,000 reduced by 5% of the amount over $112,500
over $136,000 you no longer qualify
AGI under $75,000 You qualify for the full $1,200
$75,000 & $99,000 reduced by 5% of the amount over $75,000
over $99,000 you no longer qualify
Before we move on to the next section, yes, I know it does not seem fair and no amending your return or theirs will not help the situation. Please don’t shoot the messenger on this one. Call your Congressional Representatives and ask them about it. That being said, we can now talk about the additional $500 per child.
The rules for who qualifies as a child/dependent in this situation follows the definition of a child who qualifies for the Child Tax Credit and the same rules still apply for a dependent. Those rules include relationship, residency, support, and age. You will receive an additional $500 per dependent on your tax return who qualifies for the child tax credit. This does not include qualifying relatives or dependents 17 and over.
A quick way to check your dependents is to look at the first page of your most recently filed tax return and count how many of the boxes are checked for the Child Tax Credit.
Head of Household filer who has an AGI of $110,000 with kids who are 10 & 17 will receive $1,700.
There are also provisions written in for retired individuals who do not have a filing requirement. The IRS will work off the Social Security Administrations 1099 and the Railroad Retirement Benefits statement.
This is just a brief rundown of possible scenarios. I will update everyone later today on the timing and method of payment based on the most recent IRS information.
More to come…