Economic impact payments: What you need to know
Check IRS.gov for the latest information: No action needed by most people at this time
IR-2020-61, March 30, 2020
WASHINGTON — The Treasury Department and the Internal Revenue Service today announced that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some taxpayers who typically do not file returns will need to submit a simple tax return to receive the economic impact payment.
Who is eligible for the economic impact payment?
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible. Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.
How will the IRS know where to send my payment?
The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.
For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.
The IRS does not have my direct deposit information. What can I do?
In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.
I am not typically required to file a tax return. Can I still receive my payment?
Yes. The IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2018 or 2019. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return.
Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time.
I have a tax filing obligation but have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?
Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.
I need to file a tax return. How long are the economic impact payments available?
For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.
Where can I get more information?
The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.
The IRS has a reduced staff in many of its offices but remains committed to helping eligible individuals receive their payments expeditiously. Check for updated information on IRS.gov/coronavirus rather than calling IRS assistors who are helping process 2019 returns.
https://www.irs.gov/pub/irs-utl/e-poster_payments.pdf
Read MoreIRS Announces Start Date For The New Tax Filing Season
The Internal Revenue Service (IRS) has announced that tax season will open on Monday, January 27, 2020. The IRS will begin accepting paper and electronic tax returns that day.
The due date for 2019 federal income tax returns is April 15, 2020, for most individual taxpayers (sorry, it’s a Wednesday so there’s no extra time this year). The IRS expects to process more than 150 million individual tax returns, with most of the returns filed before the April due date.
https://www.forbes.com/sites/kellyphillipserb/2020/01/06/irs-announces-start-date-for-2020-tax-filing-season/#2732be7f51a6
Read MoreThe New QBI Deduction = Huge Tax Savings
The New QBI Deduction = Huge Tax Savings
by: Mike Ward, EA
The Qualified Business Income (QBI) Deduction is a game changer for small business! In its basic terms the deduction is 20% of business income. “Wow” is what we should be thinking on this deduction. It will include most individuals who have income from the following:
- K1 income from 1120S SCorps & 1065 Partnerships
- Schedule C Sole Proprietors
- Schedule E Rental Properties
- Schedule E Other Rental Activities
- Statutory Employees
- Schedule F Farm income
There are details to this deduction and each situation is different. See a tax professional this year so you can take advantage of this once in a generation Tax Deduction.
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TAX REFORM
How will tax reform affect you? Contact a local tax expert today!
The Tax Cuts and Jobs Act is the largest change to the tax code since 1986. This bill will be effective for the 2018 tax year and beyond. For the vast majority of taxpayers this means they will not see a change in there taxes until they file a return in early 2019. Below are a FEW key changes that will impact the majority of our clients.
Individual, Married Filing Joint, and Head of Household Filers:
- Lower tax brackets for the large majority of filers. (new brackets listed below)
- Doubling (approximately) of the standard deduction from to $12,000 for individuals and $24,000 for married filing joint, and $18,000 for head of household.
- Doubling the Child Tax Credit to $2,000 per child.
- Add the 529 savings accounts for child education savings (was a Maryland State deduction not federal deduction).
- 20% deduction on “pass-through” income for most S-Corps and Partnerships.
- Repeal of the Affordable Care Act’s individual mandate beginning 2019.
- Elimination of the interest deduction on home equity loans.
- Elimination of most itemized deductions OTHER THAN home mortgage interest, state and local taxes, property tax, charitable deductions, and medical deductions.
| Tax Rate | Income Range for Individuals | Income Range for Married Joint Filers |
| 10% | $0 – $9,525 | $0 – $19,050 |
| 12% | $9,526 – $38,700 | $19,051 – $77,400 |
| 22% | $38,701 – $82,500 | $77,401 – $165,000 |
| 24% | $82,501 – $157,500 | $165,001 – $315,000 |
| 32% | $157,501 – $200,000 | $315,001 – $400,000 |
| 35% | $200,001 – $500,000 | $400,001 – $600,000 |
| 37% | $500,001 and Up | $600,001 and Up |
Businesses: SCORPs, PARTNERSHIPS
The new tax code favors these structures with a 20% deduction on pass through income. Please call OC Tax today and see if your business could benefit by converting to a “Pass-Through” entity structure.
This is a brief description of key points that effect our clients and potential new clients, we will being updating the information in the coming weeks.
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