WASHINGTON — A second round of stimulus checks are on the way for millions of Americans. But the process has raised a lot of questions. Hundreds of emails have started to pour into the Verify inbox.
The Verify team turned to the experts to get answers to the biggest questions about stimulus checks. The team sat down with Henry Grzes, an accountant from the American Institute of CPA's, and took viewer questions on Facebook Live.
To watch the full interview, already seen by more than 42,000 people, click here.
Henry Grzes, American Institute of CPA's
- Text of the Bill, "Consolidated Appropriations Act, 2021"
- National Conference of State Legislatures, COVID-19 Economic Relief Bill Analysis
- U.S. Tax Code, Guidance on 'Qualifying Children'
- Julia Gelatt, Senior Policy Analyst at Migration Policy Institute
- April Walker, Lead Manager for Tax Practice & Ethics at the American Institute of CPA's
- Cari Weston, Director For Tax Practice and Ethics at the American Institute of CPA's.
- IRS, "Treasury and IRS begin delivering second round of Economic Impact Payments to millions of Americans"
Let's get to the basics: How big are the checks? Who qualifies for them?
The checks will be for $600 this time around for a qualifying individual. That is half of what they received in the first round of stimulus checks. A couple filing jointly would be eligible for $1,200, assuming their income qualifies.
A couple or individual can also collect an additional $600 for each dependent under the age of 17.
Just as with the first round of stimulus checks, there are income requirements. An individual must have made less than $75,000 on their 2019 tax filings, in order to receive the full $600 check. For additional income, the check starts to phase out, hitting zero at $87,000.
Meanwhile couples will receive the full $1,200 check if they made less than $150,000 on their 2019 tax filings. This check will phase out above that income level, hitting zero at $174,000.
The IRS is basing your income off 2019 tax filings.
What dependents qualify? High school seniors? College students? Adult dependents?
The vast majority of emails sent to the VERIFY Team were about this topic. People want to know if they can collect an additional $600 for their dependent.
A thorough examination of this question can be found here.
The major factor, deciding who is qualified, is age. Parents or guardians will only be able to collect for their dependent if their child was less than 17 years old, on the 2019 tax filings.
"If the dependent is 16 years old or younger at the end of 2019," said Grzes. "They would qualify assuming their parents meet the income threshold."
This means a high school senior, who was 17 years old on their parents 2019 tax filings would not qualify. A college student, listed as a dependent on their parents filings would not be qualified either. This has lead to a lot of frustration from parents with young adults, listed as dependents.
"I am not understanding this," said one mother of a 20-year-old in an email to the VERIFY Team. "Because I still have to feed her, board her, and take care of her. She is still my child and not on her own."
There's also been frustration from adult dependents. They also will not be eligible for the additional $600.
"In many situations, parents are now living with their children," said Grzes. "The children are supporting their parents. Those adults would not qualify."
Had a baby in 2020? Do you get $600 for them?
New parents will not receive a check for their newest member of the family because the stimulus checks are based on 2019 tax filings. However, these parents will be able to receive this money eventually, when they file their 2020 tax return.
Grzes said that these families will be able to apply for a Recovery Rebate Credit, when filling out their 1040 form.
The VERIFY Team will have more on these Recovery Rebate Credits later in this article. This is also the way for people to indicate to the IRS that they did not receive a check for themselves or a dependent, which they are owed.
Will those on social security, Supplemental Security Income (SSI), or other similar benefits receive a check?
Yes. Our experts said that social security payments will be treated the same way as income. So long as a recipient is making less than $75,000 as an individual or $150,000 as a couple, they should receive the full amount.
"You could have an individual who is retired," said Grzes. "Let's say getting VA benefits or SSI income. As long as they don't exceed the income threshold, the adjusted gross income threshold, then they should be able to receive the funds."
Let's talk logistics. How will we get these payments and when?
Most Americans, that are eligible for the payments, will receive them via direct deposit. So long as someone filed their taxes in past years, the IRS should have access to these accounts. Similarly, recipients of benefits like social security, should have their direct deposit information on file.
If the IRS is unable to find direct deposit information, they will send the money by check. The IRS indicated that initial direct deposit payments started to go out on the night of Dec. 29. The IRS started to send paper checks on Dec. 30.
"The IRS emphasizes that there is no action required by eligible individuals to receive this second payment," the IRS wrote on Dec. 29. "Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of January 4, 2020. The IRS reminds taxpayers that the payments are automatic, and they should not contact their financial institutions or the IRS with payment timing questions.
Grzes said many people have already received their payments.
"The IRS and Treasury started transferring the money earlier this week," he said. "And I know of some folks who have already identified that they have a pending deposit in their account or it's already there."
Are undocumented immigrants getting stimulus checks, as rumored online?
No. Undocumented immigrants are not getting checks, because they do not have a social security number, something which is required in order to receive payments.
"If you don't have a social security number, you're not going to get a stimulus check," said April Walker from the American Institute of CPA's.
The confusion was likely due to a change, allowing 'Mixed-Status' families to be eligible for payments. The VERIFY Team put together a thorough examination of this question here.
A mixed-status household is one that includes one spouse who is a citizen or green card holder with a social security number, and another who is undocumented.
In the first round of stimulus check back in March, the payments were not offered to 'mixed-status' families. This time around, the spouse that is a citizen or a green card holder will be eligible for the $600 payment, as well as an additional $600 for each qualified dependent.
The spouse that is undocumented will still not be eligible for a check.
"The new fix is that - you know - U.S. citizens or green card holders can get their stimulus payments," said Julia Gelatt from the Migration Policy Institute. "Regardless of who they married and who they filed taxes with."
Will my check be taxed or garnished for things like child support?
No. Grzes said that this was false.
"You will get the check," he said. "It will not be garnished for child support."
Cari Weston, another accountant from the AICPA agreed.
"These are not considered taxable income," she said. "And will not be reported as such on 2020 tax returns."
"The payment is not income and taxpayers will not owe tax on it," said AARP in regards to the first stimulus checks. "The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 tax return."
What should I do if I've still not received my first check?
If you've still not received your payment from the first round of stimulus checks, you'll be able to claim it as a tax credit in the 2020 tax season, so long as you were truly qualified to receive such a payment.
"Now what you need to do is file a 2020 income tax return," said Grzes.
On the 1040 Tax Form, line 30 has been added, labeled "Recovery Rebate Credit." If you believe you were under-paid or not paid at all for either yourself or a dependent, this is where one can request a rebate.
New parents with a qualifying income will be able claim money for their newborns, using this rebate credit as well.