“Is my stimulus check taxable income?” Trump signs $ 900 billion coronavirus bill – but stimulus myths persist

“Is my stimulus check taxable income?”  Trump signs $ 900 billion coronavirus bill - but stimulus myths persist

<p>The second round of direct checks allowed in the nearly $ 900 billion coronavirus relief package is not a carbon copy of the first checks, starting with the payment amount cut in half, $ 600.

But many of the rules around stimulus 2.0 checks remain the same – and that means some theories about government money that were wrong in the spring are just as wrong now.

These are ducks like a supposed obligation to refund (bogus) money or a random cold caller’s ability to get your money faster (it‘s a scam).

Federal regulators are already trying to avoid possible confusion. Congress passed the relief bill on Monday and is waiting for President Donald Trump to bow to his doubts over the relatively modest sign of the stimulus, among other concerns, and signed the massive relief bill on Sunday. the pandemic, avoiding a government shutdown in the process.

But the Federal Trade Commission issued a reminder on Tuesday that no one will ever call you asking for money to speed up your access to money.

At the same time, the new set of stimulus checks has new rules for certain scenarios, such as for people behind on child support or married to a non-citizen.

Treasury Secretary Steven Mnuchin said on Monday that those economic impact payments could start arriving in bank accounts next week.

Before that money hits your bank account, here’s a look at some old myths to ignore and new ones to avoid.

‘I’m going to have to pay this money back’

“No, you don’t. It‘s up to you to keep it, ”said Lauren Saunders, associate director of the National Consumer Law Center.

Some bill summaries indicate that the stimulus is an advance on your 2020 tax credit, but consumers shouldn’t view the credit as an advance that must be repaid later.

The income thresholds are the same, providing full payment – $ 600 per adult and $ 600 per eligible child – to people with adjusted gross income less than $ 75,000 per year and to married couples jointly filing with adjusted gross income. less than $ 150,000 per year.

The Internal Revenue Service will review a household’s 2019 returns to determine eligibility. (These were the ones people had to file by July 15 or October 15 if they requested an extension.)

Payments also decrease at the same rate for people who earn above the income threshold ($ 5 for every $ 100 over the threshold).

But the payments gradually stop at a lower income level this time around.

This is because there is less money on the check so it will run out sooner if you use the same phase-out formula as before. Now the payments end completely for single filers who earn $ 87,000 per year and over, and they end for married couples worth $ 174,000 per year and over.

With the checks for $ 1,200, the payments ended at an annual income of $ 99,000 for individuals and $ 198,000 for couples.

“ The stimulus check is taxable income ”

Again, no. The stimulus check you receive will not count towards your income tax. This is something the House Ways and Means Committee noted in its recap on Monday on the new round of checks.

And because stimulus checks don’t count as taxable income, they don’t influence, offset, or account for your refund amount.

While stimulus checks don’t count as taxable income, UI money counts when the IRS calculates a person’s income tax bill, according to April Walker, head of tax practice and of ethics at the American Institute of Certified Public Accountants.

The new relief program allowed for additional weekly unemployment insurance of $ 300 in mid-March.

One risk is a nasty tax bill that awaits people who didn’t know how to withhold income tax money when they receive their weekly payments, experts say.

Thirty-seven percent of people were unaware that unemployment benefits were taxable income, according to a June survey by Jackson Hewitt, the national tax preparation channel. Just over half of the 1,000 respondents (51%) did not know they had to claim deductions from their benefits.

“ My stimulus check will eat away at my IRS refund ”

Nope. The stimulus check you get now won’t eat away at your refund later. It also will not be reduced for defaults on student loans, tax arrears or other debts, Saunders said.

When the first stimulus checks hit the accounts, the money was supposed to help families feed themselves, but with an initial lack of protections, the money “actually fed some debt collectors. This time around, the debt collectors will not be able to enter the payment, ”Saunders said.

While there are all kinds of financial obligations and defaults prohibited in stimulus checks, one exception was for debts passed on child support.

In the second round of stimulus checks, people behind on child support will not see those debts skimmed from the top. “Some of those debts were very old,” and the children who were supposed to be in care had grown up and gone on with their lives, Saunders said.

“I can speed up the payment process”

For many people who are in pain and feel like they are trying to survive financially from day to day, the money cannot come soon enough. But don’t let that push you into a scam.

Government officials will never call you, text you or contact you on social media to offer you your stimulus money in exchange for cash upfront, the Federal Trade Commission reminded consumers on Tuesday. Anyone who makes this kind of offer is trying to cheat you, the agency said.

“There is nothing like getting your money earlier or faster. Anyone who says they can get plugged in now (or soon) is both a lie and a con artist, ”the consumer protection agency added.

Overall, government impostors have cost consumers more than $ 5 million, according to an FTC database tracking consumer complaints received during the pandemic.

Once the bill is signed, the IRS will begin issuing payments early next week and through January 2021, according to the House Ways and Means Committee. “When available, electronic direct deposit will be used instead of sending a paper check,” the committee added.

‘It’s now or never to get the stimulus’

Not necessarily. Remember that direct payments are technically an advance credit on the taxes you will deposit at the beginning of next year for your 2020 income. If a person’s income in 2019 has exceeded the income limits, but she had an approximate year 2020, she can get the stimulus payment after filing her taxes. If someone still earns above the income limit, they still won’t receive a check

The IRS 1040 for next tax season will include a line where taxpayers can claim their recovery refund credit. The IRS released the redesigned 1040 earlier this month.

People who didn’t file tax returns – likely because they were making too little money – had until November 21 to submit their bank account information through the Non-Filer Portal and get their check from. relaunch this year. Saunders noted that people who missed that date can still get their first stimulus check and the next check for $ 600 by filing a tax return next year.

There is a problem getting direct checks from this year during next year’s tax season. The amounts will be consolidated into a taxpayer’s general tax refund, the Ways and Means Committee noted. For this reason, the money “will be subject to the garnishment and set-off rules that generally apply to federal tax refunds.”

The IRS will reduce repayments on obligations such as overdue child support, debts owed to other federal government agencies, and state income tax bills.

“ My immigration status will interfere with the recovery ”

Not necessarily. Like the first round of dunning checks, the second round is for people with a Social Security number. In the specific context of these direct checks, it’s US citizens and green card holders, according to Allen Orr, president-elect of the American Immigration Lawyers Association.

But under the CARES Act, citizens and green card holders married to undocumented spouses did not receive the $ 1,200 stimulus check, nor the $ 500 each for their citizen children. The ruling launched lawsuits against people who said they were deprived of much-needed money simply because of the person they loved and married.

The new bill addresses the issue of “mixed” marriages. Now the Social Security card holder will receive the direct payment of $ 600, as will all children who have a Social Security number, Orr said.

The bill also includes a retroactivity clause. This means that the Social Security cardholder who previously missed the $ 1,200 payment and eligible children who missed $ 500 will be eligible, according to Orr.

The provision was an attempt to right a past wrong, Orr said.

Last week Sen. Marco Rubio, a Republican from Florida, made the same point. “The correction of the provision that denied certain eligible US citizens to receive a federal stimulus check under the CARES Act was an oversight that needed to be corrected,” he said in a statement. “No American should have been barred from receiving federal assistance during a global pandemic because of who they married.”