Top things you need to know about Economic Impact Payments
In order to provide the necessary relief from the economic damage caused by the coronavirus pandemic in the country, the federal government made a lot of provisions available to citizens whose lives have been affected in unimaginable ways by the spread of the pandemic. One of those provisions made by the government to support the people is in form of the monetary relief scheme called Economic impact payments.
The provision of relief packages to the citizens is necessary to help lessen the impact of the financial hardship caused by the coronavirus pandemic and the lockdown rule on individuals and businesses.
The Internal Revenue Service ( IRS ) was therefore given the duty of handing over the monetary relief to the individuals that qualify for the payments according to the specifications in the CARES act signed by the President in March of 2020.
What you need to Know About Economic Impact Payments
How will IRS know my deposit information?
Individuals that filed their tax returns in 2018 and 2019, retirees, and Senior citizens already have their deposit information with the IRS and will automatically receive their economic impact payments deposited in their bank accounts or available deposit. However, individuals that do not have their details with the IRS might need to and submit their details on the IRS portal for them to receive their economic impact payments.
How much is the full amount of the economic impact payments?
The full economic impact payments for individuals without reduction is $1200,$2400 for Married couples, and $500 for each child.
However, based on calculations from the total gross income of the individual and tax debt in child support, the amount disbursed for economic impact payments can be reduced.
How do I know if I am qualified to get the economic impact payment?
Eligibility for the economic impact payments is dependent on gross income according to the report on previously filed tax returns of 2018 and 2019.
Individuals with gross income above $99,000 and Couples, without children, with a joint gross income above $198,000 will not be qualified to receive the economic impact payment.
Individuals with gross income above $75000 but below $99,000 and Couples with gross income above $150,000 but below $198,000 will be eligible to the economic impact payment but with a reduction of $5 for every $100 above the $75000 and $150000 mark respectively.
Individuals with a gross income of/below $75000 and couples with a gross income of/below $150,000 will be qualified to receive the full amount of the economic impact payment.
When will I receive my payments?
The deposit of the economic impact payment being issued out by the IRS started in the month of April 2020. The first set of individuals to receive the economic impact payment are the millions of individuals that have their direct deposit information with the IRS through information already available on their filed tax returns of 2018 and 2019. By May, other individuals that submitted their information will start receiving their payments, however, the payments will be issued out in order of priority from individuals with low gross income to individuals with high gross income.
Will I have to pay tax on my economic impact payment?
The majority worry about the prospect of if they will have to pay tax on their economic impact payments. The answer is No. Tax is only paid on income, and since the economic impact payment is not an income or a taxable liability, therefore, beneficiaries will not need to pay tax on their economic impact payment.
Will the economic impact payments reduce my tax refund?
Absolutely not. The economic impact payment will not affect your tax refunds. If the IRS owes you a refund, you can file your tax returns and claim it, however, the economic impact payment has absolutely nothing to do with your refunds.
Will the economic impact payments be used to offset my back taxes?
The main aim of the economic impact payment is to provide relief from financial hardship for individuals in this Corona pandemic season, therefore using the economic impact payments to offset federal tax debts or state tax debts will be abuse to its purpose. However, if the back taxes owed is for child support, the IRS might divert your economic impact payment to offset it and notify you afterward.
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