File now or in July?
The recently passed CARES Act includes a provision to send stimulus checks to eligible Americans and their dependents. Eligibility for stimulus checks is based on your most recently filed tax return.
If your Adjusted Gross Income (AGI) was high in 2018, defined here as over $75,000 for a single filer or $150,000 for joint filers, but your 2019 AGI will be near or below those amounts, you may want to file your taxes as soon as possible.
If your 2018 AGI was below $75,000 for a single filer or $150,000 for joint filers, but your 2019 will be near or above these amounts, you may want to delay filing your taxes. The April 15 deadline has been extended until July 15.
The stimulus payments, called Recovery Rebates, are phased out as AGI rises higher than the limits above. For every $100 above the AGI limits, the rebate is lowered by $5. A single taxpayer with no children would receive no rebate if their AGI exceeds $99,000 and childless couples reach the cut off at $198,000 of AGI. To help you estimate how much you can expect and see the effects of filing now or delaying the filing of your 2019 return, try this calculator from the Washington Post.
Technically, these funds ($1,200 per adult and $500 per child under age 17) are tax credits against your 2020 income. Therefore, if you are eligible but do not receive funds in the coming weeks, you will see your 2020 tax bill reduced when you file your 2020 return in early 2021. Oddly, if you receive funds now and your 2020 income exceeds the limits, it does not appear that you will need to pay it back.
Caution: There are many scam artists preying upon the unwary. The government will not call you or request information from you. These rebates are being disbursed based on information the IRS already has. If you have used direct deposit for a refund on your 2018 or 2019 tax returns and the bank is still currently your bank, then there is nothing else you need to do. The money is supposed to be direct-deposited into your bank account. If your bank has changed or if you have not previously used direct deposit and wish to do so, you can call 800-829-1040 to update that information. Alternatively, in the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to waiting for checks in the mail. If you have moved since filing your most recent return, file a Form 8822.
Lastly, the IRS has a reduced staff in many of its offices but remains committed to helping eligible individuals receive their payments expeditiously. Check for the most up to date information on IRS.gov/coronavirus rather than calling IRS assistors who are helping process 2019 returns.