With the economy destabilized by the Covid-19 pandemic, the U.S. government has spent trillions of dollars attempting to reduce the impact on American workers, families, and small businesses. Many Americans have received a stimulus check from the federal government, and many are hoping for another one this fall.
The first payment was authorized by Congress in the economic relief package known as the CARES Act on March 27, 2020. Currently, Congress is debating additional relief legislation, but is not expected to make headway until after Labor Day. (Although often called a “stimulus check,” the technical term is an Economic Impact Payment [EIP].)
Meanwhile, President Trump has taken executive action to bring relief to Americans in other ways. The President signed an Executive Order on August 8, 2020, to extend the suspension on evictions and foreclosures until at least August 31, 2020, which has now been extended again until the end of the year. The President also issued a memorandum to the Treasury Department to defer certain federal taxes. Contact your accountant with any questions you may have on how this applies to you.
With many programs and stimulus funds long-depleted of resources, Congress has felt more and more pressure to come to an agreement on another stimulus package. So whether you get one Economic Impact Payment or two, here are some key details to know about your stimulus check.
Do I need to pay taxes on my stimulus money?
No. The Economic Impact Payment (EIP) is not taxable income. But you should keep the IRS notice about it with your tax records. You will want to reconcile the EIP on your 2020 tax return.
Will my tax refund next year be affected?
Maybe, if your 2020 income drops significantly. Because your Economic Impact Payment was calculated using your 2018 or 2019 income, a lower income in 2020 could increase your payment. In that case, you would get a tax credit which could increase your total 2020 tax refund.
Will I have to pay back my stimulus money if my income increases or my number of dependents changes in 2020?
No. Even if your 2020 income exceeds the thresholds for the stimulus payment, you will not be required to repay it. The same principle applies to dependents; you will not need to repay the money if a qualifying child is no longer a dependent in 2020.
RELATED: [Tax Preparation You Can Trust for Individuals and Businesses - Gehman Accounting]
If Congress passes a second relief bill, how much money will I get?
A second Economic Impact Payment would likely mirror the first payment as part of the CARES act of March 2020. Remember, this potential second payment as part of the next "stimulus package" has not yet been passed.
Does the IRS send prepaid debit cards?
Some stimulus payments may be sent on a prepaid debit card known as The Economic Impact Payment Card. It will arrive in a plain envelope from “Money Network Cardholder Services.” The Visa name will appear on the front of the Card; the back of the Card has the name of the issuing bank, MetaBank®.
How do I avoid scams related to my stimulus check?
Remember that the IRS will never call, text, or email you to ask for personal or bank ac-count information. Beware of emails with attachments or links claiming to have information about stimulus payments or refunds.
I don’t want to keep the money. What should I do?
If you do not feel comfortable accepting the Economic Impact Payment, you can return it to the IRS.
If the payment was a paper check:
- Write "Void" in the endorsement section on the back of the check.
- Mail the voided Treasury check immediately to the appropriate IRS location. (You may contact Gehman Accounting for the address or go to the IRS website.)
- Include a brief explanation stating the reason for returning the check.
If the payment was a debit card:
- Write a brief explanation stating you do not want the payment and do not want the payment reissued.
- Send your explanation and the card to:
Money Network Cardholder Services
5565 Glenridge Connector NE
Mail Stop GH-52
Atlanta, GA 30342
