President Donald Trump signed a $2-trillion stimulus package last week that will send most Americans up to $1,200 in direct payment as a lifeline during the coronavirus (COVID-19) economic shutdown.
Americans in financial need now have plenty of questions about the stimulus checks and how to maximize the amount of money they receive.
About The Stimulus
The biggest question on most Americans’ minds is when will they receive their money. The Treasury Department said all Americans with direct deposit information on file with the IRS should receive their payments within three weeks. The government is also reportedly working on a web-based portal to allow individuals to provide banking information for direct deposits.
Those who have not provided direct deposit information will receive stimulus checks in the mail. The Treasury has historically taken between six and eight weeks to mail checks, but officials expect the stimulus check process will be expedited.
At this point, Americans in need of financial assistance should ensure they are doing what they can to maximize their payout. The stimulus payouts are $1,200 for an individual with $75,000 or less in adjusted gross income or $2,400 for married couples with $150,000 or less in adjusted gross income. Americans also get an additional $500 for each child dependent.
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Maximizing Your Stimulus
The individual stimulus amount phases out incrementally for individuals earning more than $75,000 and couples earning more than $150,000. The IRS is using the most current tax returns available to determine adjusted gross income.
For Americans who have already filed 2019 returns, 2019 returns will be used. For all others, 2018 tax returns will be used.
Rebecca McElroy, tax partner at Maddox, Thomson & Associates in Houston, told Benzinga that Americans should consider the implications that filing their 2019 tax returns early could have on their stimulus payments.
“Individuals who wouldn’t qualify for relief based on 2018 adjusted gross income should file their 2019 returns as soon as possible,” McElroy told Benzinga.
At the same time, McElroy said certain individuals who earned more than $75,000 and couples who earned more than $150,000 in adjusted gross income in 2019 may benefit from delaying their 2019 filing until the stimulus payments go out.
“If 2019 adjusted gross income is anticipated to exceed these thresholds but an individual or married couple would otherwise qualify for full payment based on 2018 income, defer filing the 2019 return until the extended July 15th due date,” she said.
Major Financial Changes?
As a general rule of thumb, McElroy told Benzinga that any American who experienced a major financial change in 2018 or 2019 should consider reaching out to a tax professional.
For example, McElroy was able to help a single mother of two children that was divorced in 2019 file her 2019 tax return early, putting her in line for a large stimulus check that she wouldn’t have otherwise received.
In 2018, the woman filed jointly with her husband, and the couple earned a combined $235,000 in income, making her ineligible for a stimulus payment.
“Her income as a single filer in 2019 was $48,000 and she was eligible to claim both children under the age of 10 as dependents for 2019. I told her, ‘let’s get your 2019 return filed right away!’ In doing so, she will now receive $3,400 as opposed to zero.”
The stimulus package was created and will be enacted rapidly in a chaotic environment. In order to maximize your potential payout and minimize the possibility of mistakes, Americans should understand 2019 tax filing implications, add or verify that the IRS has direct deposit information on file and confirm that the amount of stimulus is correct based on personal income and family status.
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