Last month, as the economy began its negative reaction to the COVID-19 pandemic sweeping the nation, Congress passed an emergency stimulus bill designed to help people laid off or who were otherwise affected by the downturn.
Last week, that money began arriving in people’s bank accounts, especially those who direct-deposited their tax refunds from 2018 and 2019. Those without direct-deposit capacity will be receiving them soon, although President Trump’s decision to have his signature imprinted on them will delay them a few more days.
All in all, though, many financial experts believe that with everything that’s had to be done to roll this program out, a mid-April delivery has been surprisingly efficient.
“You have to understand, this was an 880-page document that they just threw out there for people to read,” said Harry LeBlanc, a tax preparer from East Boston. “I don’t look at this as a long time. There was a lot that needed to happen. I think this has been a pretty reasonable time. Things don’t happen overnight when it comes to the government. I’m surprised they’re coming out now.”
The payments are part of a $2.2 trillion rescue package. Though there were rumors and other false reports circulating earlier about what people needed to do to be eligible for the stimulus money, the simplest explanation is this: The vast majority of people didn’t have to do anything besides qualify based on the taxes they returned from the last two years.
“And that,” said Lynn paralegal Jose Palma, “wasn’t a requirement as much as it was a way for the IRS to use for information. It’s an important piece of the pie.”
The rules have not changed. The Internal Revenue Service coordinated the effort to deliver the money. The amount of the checks was determined by family size. A payment of $1,200 for each individual who declared $75.000 or less of income in their tax returns. The figure doubles for joint filers as does the amount of taxable income declared.
Also, an additional $500 is given per dependent child in every household, according to Rep. Seth Moulton’s office. There is no statutory limit on the number of qualifying children.
If your income level exceeds $75,000 in the case of a single filer; $112,500 for a head-of-household filer; and $250,000 per joint filer the advance payment is reduced by $5 for every $100 over the prescribed amount.
Dependent children are defined as being 17 or under. Those 18 and over, are not, even if they’re listed as dependent.
“College students do not qualify,” said Palma. “Either they haven’t done taxes before or they’ve been dependent.
“The language they are using has to do with filing taxes,” Palma said. “That’s the bottom line, and that’s why many college students do not qualify.”
The rebates are not subject to taxes at any level, and do not have to be repaid. Those who lost income this year, or whose family size increased, may be able to claim an additional credit for the difference between their current circumstances and those used by the IRS in factoring their payments, Moulton said.
Marblehead financial planner Jac Bentley addressed some other concerns people have.
“If you were not required to file in 2018 or 2019 — for example, if your income did not meet the threshold — you were told to fill out a short from tax return to receive the benefit,” he said.
However, within days of stating that requirement, Bentley said, the treasury department reversed course, saying that senior citizens, Social Security recipients and railroad retirees who are not typically required to file tax returns would not need one to get their payments.
Instead, payments would be automatically deposited into their accounts or sent by mail — however they typically get their benefits delivered to them.
Also, said Bentley, those who may have “borrowed” from Individual Retirement Accounts, which are generally set up to be used once a person has stopped working, “it is not added to your 2019 income and should not affect your eligibility to receive payments.”
For those who have their tax returns direct-deposited, there are no additional steps they need to take. The money will be routed there. For those who did not, the IRS has mailed out the checks.
