March 31, 2020
As you know, we at Freidel & Associates, LLC have been working hard to ensure that our clients are aware of how to take advantage of the various provisions of the CARES Act. The IRS has issued IR-2020-61, which provides instructions on how those eligible for the stimulus payments under the CARES Act can receive them.
For those that filed a 2018 federal income tax return with direct deposit information or have already filed their 2019 federal income tax return with direct deposit information—you may not need to do anything. If the IRS received your direct deposit information in 2018 or 2019 and that information has not changed, you need not do anything to receive your stimulus payment.
For those that have not been required to file a tax return because their income is not high enough, the IRS is encouraging you to file an information-only return with your direct deposit information so that they know where to deposit the money. The Treasury Department is working on making this a simple form, but in the meantime, you may want to file a 1040 showing zero income and file this with the IRS as soon as possible. UPDATE 4/3/2020: The IRS has clarified that it will not require seniors or those otherwise receiving social security payments to file information-only returns to receive their stimulus payments. Instead, the IRS will use the direct deposit information on file with the Social Security Administration. This was confirmed on April 3, 2020, by Social Security Commissioner Andrew Saul.
For those that have not yet filed their 2019 return because that deadline was extended to July 15, if your direct deposit information has changed from your 2018 return, you may want to work with your tax professional to file your 2019 return as quickly as possible. Otherwise, the IRS will attempt to deposit the money in your 2018 return account only to have the money returned to them and then mail you a paper check— which may take months to occur.
Remember that not all tax payers are eligible for the stimulus payments. For those taxpayers that made $99,001 or more individually or $198,001 or more married filing jointly, you likely will not receive the payment, absent further guidance from the IRS. However, the way that the CARES Act is written provides that eligibility is ultimately based on your 2020 return, so changes in income between 2018, 2019, and 2020 may change your eligibility. The Treasury Department has not yet issued guidance on how individuals who have seen a drop in wages can access their stimulus payments prior to filing their 2020 return. But, if you are on the flip side and have seen an increase in your wages such that you qualified in 2018 (or 2019) and no longer are eligible, you will want to save the money—as the stimulus payments are technically an advance refund on your 2020 tax return and you will not receive the offsetting credits.
Further guidance may be coming from the Treasury Department on these open questions. When that happens, we will continue to provide updates on our blog. We encourage everyone to share this information to make sure that it reaches those that need the stimulus payments the most as soon as possible.