In response to the challenges presented by Coronavirus (COVID-19), the government is taking several actions to bolster the economy, such as offering expanded unemployment, student loan relief, sending stimulus checks and more.
For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.
As Coronavirus (COVID-19) continues to disrupt the U.S. economy, many have turned to the federal government for hope. To help provide relief in these unprecedented times, the Coronavirus Aid, Relief and Economic Security Act (CARES) — a $2 trillion stimulus package to help individuals, families and businesses was signed into law.
This relief will be taking many shapes over the coming months, such as:
- Widespread stimulus legislation, including efforts such as stimulus checks, mortgage relief for those adversely impacted by the economic slowdown, student loan interest relief, and more.
- The Federal Reserve has announced actions to stabilize and backstop the economy.
- The IRS is providing relief to taxpayers by extending most tax filing and payment deadlines for tax year 2020 to May 17, 2021.
But how do some of these efforts work and who will they directly impact? Let's take a look at the stimulus checks, how they work, who qualifies, how do you get one, and how your taxes will be affected.
What is a stimulus check?
In its simplest form, a stimulus check is a rapid, direct cash transfer from the federal government to households. This can be one of the swiftest ways to put money back into the pockets of people dealing with the economic impact of the Coronavirus outbreak.
Who qualifies for a stimulus check and how much will I receive?
According to the IRS, approximately 80% of Americans will be eligible to receive full or partial stimulus payments through the CARES Act. If you have an adjusted gross income (AGI) of up to $75,000 ($150,000 married filing jointly), you should be eligible for the full amount of the recovery rebate.
For tax filers with income above these amounts, the stimulus payment decreases by $5 for each $100 above the thresholds. The stimulus check rebate completely phases out at $99,000 for single taxpayers, $136,500 for those filing as Head of Household and $198,000 for joint filers with no kids. Your eligibility will be based on information from your most recent tax filings (2018 or 2019).
Use our Stimulus Check Calculator to see if you qualify and how much you can expect.
Where do I find my Adjusted Gross Income (AGI)?
Your adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction and can be found on line 8b of your 2019 Form 1040.
How Do I Get My Stimulus Check?
Stimulus checks will be based on information from your most recent tax filings, either tax year 2019 or 2018. If you have not filed your 2019 taxes, the IRS will use information from your 2018 tax return. The IRS will use your adjusted gross income information in the most recent tax return filed (2018 or 2019) to determine the amount of your stimulus payment and will deposit your stimulus payment based on the latest direct deposit information. If your tax return does not indicate a direct deposit account, you will receive a paper check.
If you are not required to file and you don’t receive Social Security income or Supplemental Security Income (SSI) you can provide the IRS with the information they require to issue a stimulus payment using TurboTax Stimulus Registration Product.
How do I update my direct deposit information with the IRS to receive my stimulus check?
The IRS won’t have your direct deposit information if you didn’t provide it on your 2018 or 2019 tax returns, but you can use the IRS Get My Payment tool to check your payment status and confirm your payment type (direct deposit or check). If the IRS already has your direct deposit information and IRS Get My Payment tool shows your payment as pending or processed, you cannot use the tool to change your direct deposit information.
How will I receive my stimulus check if I don’t have direct deposit setup with the IRS?
If you don’t have direct deposit a paper check will be mailed to you.
When will I receive my stimulus check?
To find out when your stimulus check is coming, visit the IRS Get My Payment tool.
Do I need to file my taxes to get a stimulus payment?
If you are required to file a tax return, the IRS will use information from your most recent filed tax return (2018 or 2019) to issue your stimulus payment.
Here are the reasons you are required to file a tax return for tax year 2020:
- Taxpayers who earn income more than the IRS income filing threshold ($12,400 single, $18,650 Head of Household, $24,800 married filing jointly).
*Note: If you are single and 65+, thresholds are bumped up to $14,050 for 65+ or blind. If you are married filing jointly, 65+ thresholds are $13,700 for 65+ or blind.
- Self-Employed whose net income is $400 or more since they need to pay self-employment taxes on income of $400 or more
- Dependents with unearned income more than $1,100 and earned income more than $12,400
- You received an advance payment of the health coverage tax credit
- You owe taxes on an IRA or Health Savings Account
If are not required to file, you can use the TurboTax free Stimulus Registration Product to provide the IRS information needed so that you can receive a stimulus payment.
What if I receive Social Security or Supplemental Security Income?
Not everyone needs to file to get a stimulus payment. If you receive Social Security retirement, disability or Railroad Retirement income and are not typically required to file a tax return, you do not need to take any action — the IRS will issue your stimulus payment using the information from your Form SSA-1099 or Form RRB-1099 via direct deposit or by paper check, depending on how you normally receive your Social Security income.
If you receive Supplemental Security Income (SSI), you will automatically receive a stimulus payment with no further action needed. You will generally receive the automatic payments by direct deposit, Direct Express debit card, or by paper check, just as you would normally receive their SSI benefits.
Should I file my 2020 taxes now?
The IRS already began issuing stimulus payments based on your latest filed tax return between 2018 and 2019. If you are required to file a tax return and haven’t filed your 2020 taxes, you may want to consider filing since you may be eligible for a tax refund. Last tax season about 72% of taxpayers received a tax refund and the average tax refund was close to $3,000.
Are stimulus checks considered taxable income?
The stimulus checks were paid based on information from your most recent tax return and will be reconciled in tax year 2020 to ensure you received the correct rebate amount.
- If you are underpaid based on your 2020 income you may receive more tax credit when you file your 2020 taxes.
- If you are overpaid, you don’t have to pay it back.
For example, if you received $700 as an individual based on your 2019 return but when you file your 2020 tax return, it shows your income took a hit and you should have received a $1,000 stimulus check. You would receive an additional $300 credit on your 2020 return.
Let TurboTax keep you informed on the latest information on how taxes are impacted by COVID-19 relief including the most up-to-date information on tax filing deadlines, visit our Coronavirus Tax Center.
Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.