
As you have probably heard by now, Congress recently passed, and the President signed into law, a stimulus package designed to provide critical assistance to Americans affected by the COVID-19 pandemic. This act, which is called the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act,” provides wide-ranging solutions in response to the crisis. These cover a variety of sectors from small businesses, to education, to health care. The CARES Act also provides important relief for individuals, designed to help keep average Americans above water during this uncertain time. Most importantly for individuals, the Act provides for stimulus checks to be sent to every eligible adult. This post will explain how the checks work and how to ensure you receive yours. Also, it will discuss some of the best potential uses for your stimulus funds.
What is a stimulus check?
The CARES Act authorizes the government to send you a “stimulus check,” also called a “recovery rebate” or an “economic impact payment.” Whatever you call it, this payment is essentially a tax credit paid in advance. Normally, when you qualify for a tax credit you would use it toward your tax liability when you file an annual income tax return. However, the government is using this program to essentially pay a 2020 tax credit in advance, because of the urgency created by the pandemic.
How much money should you expect?
The maximum is $1,200 for individuals or $2,400 for married couples, plus $500 for each qualifying child. To receive the maximum amount, you must have an adjusted gross income (AGI) of $75,000 or less if single or $150,000 or less if married filing jointly. If your income is above the limit, the IRS explains that “the payment amount is reduced by $5 for each $100 above the [threshold].”
Where can you find your adjusted gross income, and which year’s tax return is the IRS looking at?
As the IRS explained here, it will first look to see if you have filed a 2019 tax return. If so, it will use the AGI from that return. If not, it will use the AGI from your 2018 return. If you haven’t filed a tax return for 2018 or 2019, you need to take action (more on this below). If you want to see your adjusted gross income to know how much money you will receive, you can look at your prior return. The AGI is listed on different lines, depending on which type of return you filed. As Turbo Tax explains, AGI can be found in the following locations:
- Line 8b on Form 1040 (for tax year 2019)
- Line 8b on Form 1040-SR (for tax year 2019)
- Line 7 on Form 1040 (for tax year 2018)
- Line 21 on Form 1040A (for tax years before 2018)
- Line 4 on Form 1040EZ (for tax years before 2018)
- Line 35 on Form 1040NR
Wednesday April 1, 2020
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