How Taxes Affect Your Coronavirus Stimulus Check

Updated September 17, 2020

The CARES Act has officially been set into motion, which means economic impact payments (also referred to as stimulus payments) will start rolling out in early-to-mid April to help provide aid to all eligible taxpayers due to the financial strain caused by the COVID-19 pandemic.

Since stimulus checks and direct deposits are on their way, here’s everything you need to know.

How much stimulus money will I get?

Let’s go into a bit more detail. Single adults who have an adjusted gross income (AGI) less than $75,000 will get $1,200. Think of AGI as the money you make in a year. Married adults will get $2,400, and each child in your household will add another $500 to your total.

If your AGI is above $75,000 as a single filer, the stimulus relief starts phasing out at a rate of $5 for every $100 you make above the threshold – which means you won’t get any stimulus money if you make above $99,000 per year.

For married filers, the phaseout begins at $150,000 and ends when AGI exceeds $198,000. Heads of household start phasing out at $112,500, and the stimulus amount hits $0 when AGI exceeds $146,500.

What if I don’t receive the full amount?

For those who receive a smaller stimulus payment than expected, an additional amount may be available when they file their 2020 tax return. Since EIPs are technically an advance payment of a 2020 tax credit, any amount you qualify for but didn’t receive could be claimed on your 2020 tax return. Be sure to keep your confirmation letter for the EIP—it should arrive within a few weeks after you receive your payment.

Is my stimulus check taxable?

The short answer is no – the stimulus money is yours to use as needed.

The long answer is that this check or deposit is basically a refundable credit (like the earned income tax credit or child tax credit) that’s being advanced to you now, rather than making you wait to claim it on your 2020 tax return next year. It is not being treated as a taxable form of income.

Do I have to apply for my stimulus money?

The best thing about the stimulus package is that most people don’t have to do anything to get it – the IRS will issue your money based on the income you reported on your latest tax return. If you haven’t filed your 2019 taxes, your 2018 tax return will be used. If the IRS has a bank account on file because you’ve used direct deposit for your tax refund in the past, they will use it automatically.

Didn’t want a direct deposit before now? The IRS has launched the Get My Payment tool, where you can track your payment and provide bank account info if you’d like.

But hold up – what if you haven’t filed a tax return in the last two years? If you haven’t filed, get at least one of those returns done as soon as possible so the IRS gets the information it needs to process your payment. It will need your adjusted gross income, number of dependents, physical address or bank account information, and so on.

If you haven’t filed in either year but receive Social Security, Railroad Retirement, or Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), or VA benefits, the IRS will use the information provided by the appropriate government agency to send your Economic Impact Payment—you don’t have to take any action to get your money. However you normally receive your benefits, either through direct deposit or by paper check, is the method the IRS will use. If you receive government benefits, aren’t required to file a tax return, and never received the additional $500 per qualifying child, use the Non-Filers: Enter Payment Info tool to update your information. SS, SSI, RR, and VA recipients must act before Wednesday, September 30 to receive their additional payment in October.

It is unclear whether SSDI recipients could qualify for this window to update their information, but it doesn’t hurt to try—at the end of the day, you should receive your additional $500 when you receive your refund in 2021 if you don’t get it sooner.

If your child is 17 or older at the end of 2019 and doesn’t qualify for a stimulus payment because you’ve claimed them as a dependent, they could receive the $1,200 stimulus amount as a tax credit next year if you do not claim them as a dependent for 2020 and if they file their own individual tax return.

Those who didn’t file taxes in 2018 and 2019 and don’t receive any of the government payments mentioned above should use the Non-Filers: Enter Payment Info tool to register for an Economic Impact Payment (EIP). This is primarily for Americans who are under the normal income limits for filing taxes.

How soon will I get my check or direct deposit?

The IRS plans to start distributing economic impact payments in early to mid April and will continue to send them through the end of the year.

What if I get a check but it goes to an old address?

Now’s your opportunity to get your address information settled. You can use IRS Form 8822, and you’ll want to do so soon; it usually takes four to six weeks to process.

If you e-file your tax return with the new address, the IRS will use that address to send your check – and if you e-file and choose to have your refund directly deposited to a bank account, the IRS will use that account information to deliver your money.

We’ve got your COVID-19 tax news here.

We’ll continue to keep you updated on everything you need to know about the Coronavirus crisis and how it could affect your taxes. We hope everyone is staying healthy and safe, wherever you’re from – we’re in this together.