2020 Stimulus breakdown
Let’s break this stimulus thing down into a language people can understand.
1. Who qualifies?
Any taxpayer who is not a nonresident alien (duh) nor claimable as a dependent and is within the federal adjusted income range specified as:
- 75,000 for single filers
- 112,500 for head of household filers
- 150,000 for joint filers
If your FAGI is less than or equal to those amounts you will get the full credit as denoted later. If you earn more than those amounts you will be phased out of the credit subject to the following rule:
- The credit is limited by 5% of the income that exceeds the above income limits. To put it into very simplistic terms, for every $100 your FAGI is above the limits your total credit amount will be reduced by $5.
How much money will I get?
The credit is $1,200 ($2,400 for joint filers) plus an additional $500 for every qualifying child for which one could claim the child tax credit (basically any directly related dependent under 17 years of age at the close of the tax year). It doesn’t look like there’s a cap on the number of children as far as I can tell.
How do they determine this?
The IRS will first look to your 2019 tax return, in the case there is not one then they will look at your 2018. If neither of those exist then they will look at your form SSA-1099 (social security distributions) or RRB-1099
(Railroad Retirement). If you have not filed a 2018 or 2019 and you don’t receive social security or railroad retirement benefits then you will be deemed as ineligible to receive the credit, so tell old people who don’t file and don’t receive those benefits to file ASAP if they want this credit.
There is also a provision in the law for a public awareness campaign to hopefully provide some clarity on this.
How and when will I get my money?
If you had your return direct deposited, then they will put it directly into that account. If not I assume they’ll mail it (the law doesn’t explicitly say that, but that’s what precedent tells us).
when will you get it? The law literally says ASAP… lol. The only limitation on that is it has to be made before the end of the year gee… thanks…
- It’s also important to note that within 15 days of them sending you your money you’ll receive a letter that will tell you how they gave it to you and contact information you can reach them in the event you did not receive the money.
Will this affect my taxes?
The short answer: well yes, but actually no.
But y’all probably want to know how so.
The check you will receive is simply an advance payment of a refundable credit
The best I can figure out is that because normally you’d just get this money taken off your taxes at the end of the year as a federal credit it would not be deemed taxable. A credit simply works against your taxes, dollar for dollar, and being refundable simply means it’s not limited by the amount of tax you owe (you can get more back than you owe in taxes, i.e. it’s free money).
- Yet another thing to note here. Because it’s an advance payment of a credit for 2020 and it’s based on prior year information, you may be subject to a recapture in the event that some information has changed (like a kid aging out for example) and that will increase your tax liability.
Now don’t quote me on that, but that’s the best I can figure based on my reading.
Disclaimer: This is not meant to be tax advice to be taken word for word, it’s merely my interpretation on the law. Do consult your tax professional for details on how it will apply directly to your tax situation.