10 Things to Know About the Economic Impact Rebate Payments

UPDATE: IRS website for non-filers now open

By Ashley Burnside

In late March, lawmakers passed a third coronavirus response package called the Coronavirus Aid, Relief, and Economic Security (CARES) Act that offers a first step in essential economic relief for millions of workers and people with low incomes. One component is the economic impact rebate payments. Despite wide news coverage about these payments, many have questions about who’s eligible and how to receive the payments. Below are ten things to know about these payments:

1. The payments will be $1,200 per qualifying adult ($2,400 for married taxpayers filing a joint return) and $500 per child under 17 years old. Children who are 17 years old and older and other dependents, such as those who are permanently disabled, are not eligible for the $500 payment. You will not need to pay back the IRS because the payments are an advance against a new credit. These payments will not affect eligibility for other tax credits.

2. You can’t receive the $1,200 payment if you can be claimed as someone else’s dependent. You can be claimed as someone else’s dependent based on your relationship to the filer, your age, whether you lived with your parents for more than half of the year, and whether you were financially independent for more than half of the year, among other factors. This will affect many full-time college students under age 24. However, it’s important to review the rules, since not all college students are dependents. Here are more details about whether or not a child qualifies as a dependent.

3. You don’t need to have earned income to qualify. Unlike in earlier versions of the bill, the full payment is available to those with little to no income. Even if you are making $0, you can still receive the full payment. The payments phase out at higher income levels, starting at $75,000 for single filers. Here are details on the phase-out rates.

4. You must have a Social Security Number to receive the payments. The whole household will be disqualified from the payment if one spouse has an Individual Taxpayer Identification Number (ITIN), with the exception of military spouses. This will prevent immigrant and mixed-status families from receiving these payments, including many children who are citizens. Our communities are better off when all people with low incomes receive economic relief during hard times. We are disappointed in this restrictive requirement.

5. The payments will be based on your 2019 or 2018 tax returns. If you have not filed a 2019 return, the IRS will use your 2018 return. If you qualify for a higher payment based on your 2020 circumstances, such as your family size or income changing, you will get that money when you file your 2020 return next year, but you won’t owe money if you later qualify for a smaller payment based on your 2020 income or family situation.

6. Most people will need to file a tax return or fill out a new form to receive the credit. Social Security recipients, Supplemental Security Income (SSI) recipients and veteran benefit recipients will receive the payments automatically. At this time, automatic payments do not apply to any other benefits besides Social Security, SSI and veteran beneficiaries.

7. The payments will be automatically paid by direct deposit if you provided an account on your tax return or you can add it through the Get My Payment IRS website by Wednesday, May 13th at 12:00pm ET. Payments can be direct deposited to prepaid cards as well as to traditional bank accounts. Checks will be mailed if there is no account provided. This will create additional challenges for people without a permanent address. Those who have a direct deposit on file with the IRS have already begun to receive their payments, while paper checks will be mailed in waves starting in mid-April.

8. Like other tax refunds, these payments will not be counted toward eligibility for means-tested programs and will be disregarded as an asset for 12 months. This means the payments won’t jeopardize your participation in programs including Medicaid, the Supplemental Nutrition Assistance Program (SNAP) and public housing. In addition, the rebate checks are not considered taxable income.

9. The payment can’t be intercepted for past-due taxes, student loans, or Unemployment Insurance over-payments, but it can be intercepted for child support that is owed. State policies determine whether this intercepted money for child support would go to the custodial family or to the state to repay previous benefits provided to custodial parents. In California, the rebate checks will first go to custodial parents, then go to non-custodial parents, and then to the arrears.

10. The requirement to file taxes to receive the payment will be a barrier for many people. This is especially true given that many Volunteer Income Tax Assistance (VITA) sites that offer help with preparing taxes are closed due to the coronavirus pandemic. Public education campaigns and free online resources (such as the IRS Free File program) will be vital for helping people access these payments, especially those who have not previously filed taxes and those making little to no income.

How to get the rebate payment:

The IRS has extended the tax filing deadline for 2019 to July 15, 2020, but you should file your taxes sooner to get your payment as soon as possible. For those who have not filed taxes in either 2018 or 2019 and don’t have taxable income, the IRS has created a form for requesting the stimulus payment. Social Security and SSI recipients do not need to fill this out to get the $1200 payment, but should use it to identify any children eligible for the $500 payment. Individuals eligible for the Earned Income Tax Credit (EITC) should use the regular Free File program to claim both the EITC and the stimulus payment. 

You can request the payments through December 31, 2020. If you don’t file before the end of the year, you can receive the payment when you file your taxes in 2021.

Now open: IRS website for non-filers

You can check the status of when you will receive your payment at the Get My Payment IRS website.

For more information on the rebates see: https://www.eitcoutreach.org/tax-filing/coronavirus/

If you need assistance filing your return visit: getyourrefund.org