Well, over the weekend, the President signed the big new stimulus bill, and we have been poring over the details ever since.
Bear with us … it is MASSIVE.
But it’s also full of great benefits for Connecticut families and business owners (even those with a “side hustle”), so we’ve already been working on helping our clients with all of it.
The first, VERY good news about these direct stimulus checks to individuals (many more details are below in this strategy note): you don’t have to “do” anything to get them. That’s a big sigh of relief for taxpayers everywhere (and their tax pros!).
That said — if you have any questions, or your 2018 or 2019 taxes haven’t been filed yet, let us know.
We are still taking on new clients and helping people through this, despite all of the various quarantine requirements:
So again, you can send a link to this post to your friends. AND, if they want our help in navigating all of the upcoming credits, changes, and economic stimulus details, have them reach out.
Now, about those stimulus checks…
As I correctly predicted, they landed on $1,200 per adult and $500 per child … but there is an income phase-out — STARTING at $75k AGI for individuals and $150k married/filing jointly, those amounts begin to phase out.
This will be based on either your 2018 return OR an already-filed 2019 return OR your Social Security SSA form.
You won’t get any relief check if your AGI tops $99,000 as a single filer; $146,500 if you’re a head-of-household; or make $198,000 and file jointly with your spouse. 🙁
There isn’t, however, any limit on the number of qualifying child dependents that can net you $500 each.
How will I get them?
If you had a tax refund or Social Security benefit directly deposited, that’s what will happen to your relief check. If you had it mailed, that’s what will happen here, too.
As for those snail-mailed stimulus checks, if you moved since you last filed, well, your check will be delayed. The IRS is going to send any mailed check to your last address that it has on file and if that’s an undeliverable one, it will go back to Uncle Sam.
There are backstops, and there will be notices that are sent out in advance. If you have any problems or questions about this … again, we’re here to help.
How soon will these go out?
They will begin the process THIS week, now that this law has been signed.
Let’s be realistic, though: this process could take weeks.
This a LOT of checks, and they are being delivered by an agency that was already short-staffed before the current crisis!
Officially, the legislation says the Treasury Secretary shall see that the payments are made “as rapidly as possible”. And while it has no firm (or even suggested) check delivery start date, it does say that the checks must be sent by Dec. 31, 2020.
Is this taxable income?
Nope. These relief benefits are taking the form of an “advance tax credit”. That means that we will report the amount on your 2020 return for you and calculate whether you received the proper amount this year.
So, if I were you, I would take note of the check amount you get. I suspect that the IRS will send out a form with the relief check payment amount. But just in case, I’d save a digital or a paper copy of the credit amount. (We are, after all, dealing with the government.)
Alright, that’s enough for today. More to come, probably later this week.
Do let us know if we can help.
Emelia Mensa EA, CPA
Emelia Mensa CPA
And again, to reiterate my “CRISIS Action Plan” for my Connecticut clients:
1) Don’t marinate in other people’s panic. Be mindful of your social media consumption.
2) Get financially and logistically prepared for the worst.
3) Make sure you have some ready, liquid assets, if you are able. (I.e., cash in the bank, and in hand.)
4) Set aside plans for any big spending until the dust settles — but especially look out for your small business owner friends and vendors.
Much more to come in the days ahead.