Stimulus Money and Taxes during COVID-19 

Updated: May 12, 2020 at 3PM; Materials prepared by:  Omeed Firouzi, Esq.  ABA Section of Taxation Christine A. Brunswick Public Service Fellow 

Live Hotline Available: The IRS now has a live number for stimulus assistance: 800-919-9835  

Check out Omeed’s Facebook Live presentation for a recording of this page. 

What You Need to Know About the CARES Act Stimulus Payments 

What is the CARES Act? 

The CARES Act is a $2 trillion federal stimulus package passed by Congress and signed into law by the President. This law is intended to address the COVID-19 crisis through aid to businesses, expansion of unemployment compensation, and one-time recovery rebate checks for individuals. 

What do I need to know about the recovery rebate checks?  

The CARES Act authorizes Economic Impact Payments, administered through the U.S. tax code. Economic Impact Payments (EIP): 

  • $1,200 for single filer making up to $75,000 

  • $2,400 for married filing jointly couple making up to $150,000 

  • $1,200 for Head of Household filer (with dependent) making up to $112,500 

  • + $500 for each qualifying child who is below 17 years olds

  • Payments decline after that and phase out at higher income levels 

Checks reduced by $5 for each $100 that a taxpayer income exceeds phase-out levels referenced above but, unless you have children, there are no stimulus payments for:  

  • Single filers making more than $99k 

  • Couples making more than $198k 

  • HOH filers making more than $146,500 

  • Only way you can get stimulus payment if you make above these levels is if you have children under age 17.  

For instance, if you’re a married couple with three children under 17 and your gross income is $200,000: your income is $2,000 above the $198,000 cut-off. $2,000 = 20 increments of $100. For each $100 increment, your payment is reduced by $5 so that is $5 x 20 increments = $100. The only payment at all you are eligible for here is the $500 per qualifying child so that would be: $500 x 3 children = $1,500 – $100 (to reflect that you’re above the highest threshold) = $1,400 payment for your three children. 

However, payments will be reduced to $0 for these taxpayers (who have 1 qualifying child) with incomes above these levels:   

  • $208,000 for taxpayers filing a joint return 
  • $146,500 for taxpayers filing as head of household 
  • $109,000 for all others 

How do they obtain my income information? 

From your 2018 or 2019 federal tax return. Consider that if your income went way up in 2019 beyond the phase-out limits, for example, you may want to hold off on filing your 2019 return until you get your stimulus check so that it is based on 2018 return information!  NOTE: This should not penalize you. 

Who can get these payments and what are the requirements?  

You must be a U.S. citizen, legal permanent resident, or have a valid Social Security number. You cannot be a nonresident immigrant.  You generally should automatically get the payment if you: filed a 2018 or 2019 federal tax return or you receive Social Security retirement, disability, or survivor or railroad benefits or Supplemental Security Income (SSI) benefits or veterans’ benefits 

Is there anything more specific I need to know if I am in one of those categories? 

If you get only Social Security or SSI newly as of January 1, 2020 or later, and you did not file / had no reason to file a 2018 or 2019 return, you should use the IRS Non-Filer Portal: https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here   

If you get only Social Security or railroad benefits and* you have a qualifying child under 17 who you did not claim on your 2018 or 2019 return (whichever return you filed last), 4/22 deadline has passed but that people who get only Social Security or railroad benefits and who have children they didn’t claim on a 2018 or 2019 return can still claim those children on a 2020 tax return in early 2021. Also, if you get only SSI or veterans’ benefits with a qualifying child under 17 who you did not claim on your 2018 or 2019 return (whichever return you filed last), you have until May 5th, 2020 to use the online portal. 

Is there anyone else who needs to use this portal? 

Yes. If you were not required to or did not need to file a 2018 or 2019 return (especially if you could not claim a refund), you should use the Non-Filer portal to obtain the payment. For instance, if in 2019 you received only SNAP or only TANF or had no income (assuming you neither filed nor needed to file a 2018 return), you should use the Non-Filer portal. The effect of this portal is that it creates a $1 tax return of interest income for 2019. 

Should I use this tool if I haven’t filed a 2019 return but I intend to file a 2019 return? 

Even if your gross income is $12,200 or less (if single) or $24,400 (if married), you may still be eligible for a refund on your 2019 return! So if you are owed a refund on your 2019 return, file your return to claim a refund ASAP. Otherwise, if you use the “non-filer” portal for 2019, it will create a $1 return for you and potentially force you to file a new paper return for 2019 that could take months to process thus delaying your refund! 

Does everyone in the tax household need to have a Social Security number in order for anyone in the household to get the EIP? 

It depends. If you do not have a Social Security number (SSN) but your qualifying children do have SSNs, nobody in the tax return household will get the stimulus payment. A “qualifying child” is a child under 17 who is related to you by blood or marriage more closely than as a cousin (for example, your children/grandchildren, siblings, nieces/nephews) and who lived with you in the United States for more than half of the year. Also, if you have an SSN but your qualifying children do not have SSNs, nobody in the tax return household will get the stimulus payment (that is if you claimed the qualifying children without SSNs on your tax return) 

There is an exception in that if your child’s other parent has a SSN and that parent can claim the child as a qualifying child, then that parent can get the $500 EIP for the child so long as the other parent doesn’t file the return as Married Filing Jointly with you.) If you do not have an SSN and you didn’t file a tax return for 2018 or 2019, you could still do so and if you do not claim your qualifying children who don’t have SSNs, then you should get the $1200 EIP for yourself (and for your spouse if your spouse has an SSN and you file jointly). 

Also: you should not be disqualified from the EIP for claiming dependents who do not have SSNs but who are not qualifying children (for example, parents and other dependents who are 17 or older). 

Do I have to file a return if I had just Social Security income? 

No. Social Security recipients will automatically get the EIP through the same means by which they get their benefits. If you are newly receiving Social Security as of January 1, 2020 or later, you should use the Non-Filer portal. 

Is it too late to file my 2018 or 2019 tax return? 

No. Generally, low-income taxpayers can file for free electronically remotely through the Campaign for Working Families (CWF), which will also offer telephone assistance from IRS-certified volunteers, or through PathwaysPA. These online resources are the fastest way to get these returns done now. 

Is the stimulus payment taxable income? 

No. 

Can it be seized because I owe another debt? 

The only governmental debt that the stimulus can be taken to pay is if you are in arrears in child support. Debts that it cannot be taken for: 

  • Past IRS debt 

  • Past Pennsylvania state income tax 

  • Federal Student loan debt  

Will it affect my 2020 refund?   

It should not unless you are entitled to additional EIP that you do not get this year. 

How soon can I expect the check and how will it arrive? 

IRS began depositing checks the week of April 13 and they are continuing to deposit them in batches of millions working their way up the income ladder. They will come in direct deposit in your bank account if the IRS has that information from your 2018 or 2019 return or from your SSA-1099. If not, they will be mailed to whatever address was on your 2018 or 2019 return, whichever was last filed, or your SSA-1099 – this process could take at least several weeks.  As required by law and for security reasons, a letter about the payment will be mailed to each recipient’s last known address within 15 days after the payment is made. The letter will provide information on how the payment was made and how to report any failure to receive the payment. 

What if I have moved since the last tax return I filed? 

You can file a Change of Address form with the IRS but this could take weeks to get processed or, if you file a new tax return, you can include your new address n that return. You could also try changing your address with the USPS; the quickest way to get your address changed with the IRS would be online - https://moversguide.usps.com/mgo/disclaimer 

What if my direct deposit information was not on my 2018 or 2019 return? 

You can go to the following IRS “Get My Payment” app online to enter your bank account information if it was not included on your return. If you enter your direct deposit information, you can see to it that you get the payment sooner rather than later. Further, you can use this app to check the status of your payment: https://www.irs.gov/coronavirus/get-my-payment  

Do college students get the payment? 

You will not get the payment if you are listed as a dependent on someone’s tax return. Even if someone hasn’t claimed you as a dependent, the IRS may not send you a stimulus payment if they think you could be claimed as a dependent. Even if you CAN be claimed as a dependent, the CARES Act says that you are not eligible for an EIP.  However, if you cannot be claimed as a dependent, you could potentially get your own check.  It will depend upon whether you have filed a tax return for 2018 or 2019, or if you file one for 2020 where you then may be able to get the check you should’ve received. 

For additional resources, please check out Omeed’s Facebook Live presentation: https://www.facebook.com/watch/live/?v=165218724780042&ref=watch_permalink

Also please reference this FAQ guide from our sister organization, Community Legal Services of Philadelphia (CLS), that Omeed worked with CLS staff to compile: https://clsphila.org/consumer-rights/economic-stimulus-payments/

Everyone at Philadelphia Legal Assistance is currently working from home.  You can still contact Omeed at his usual office number 215-981-3833, or email ofirouzi@philalegal.org. Stay healthy!

Other IRS, State, and Local Tax Relief in the COVID-19 Crisis 

Filing and Payment Deadlines: The IRS and the Pennsylvania Department of Revenue have extended their return filing and payment deadlines for 2019 individual income tax returns to July 15. 

If you are claiming a refund for 2019, you should still electronically file for free ASAP through the Campaign for Working Families or PathwaysPA. 

You can still file for an extension until October 15. 

If you need to newly file or amend a 2016 tax return to claim a refund, you now have until July 15 to do so. 

For Philadelphia Business Income Receipts Tax, Net Profits Tax, and Annual Reconciliation Earnings Tax, the payment and filing deadlines are now July 15. If you do not pay by then, interest and penalties will be backdated to April 15. 

The deadline for 2020 real estate taxes is now June 15, 2020. 

Any quarterly payments due to the IRS between April 1-July 15 are now due July 15 (with no penalties if paid before then). 

You can still make HSA and IRA contributions up to July 15 for tax year 2019. 

Crucially: the IRS is stopping most collection activities, including liens, levies, passport certifications, private debt collector referrals, and generally not starting any new audits. 

You can choose to suspend payments for IRS Installment Agreements between April 1 through  July 15. 

The IRS can still take your 2019 refund and apply it to IRS debts from previous years, but you may be able to get your refund through the Offset Bypass Refund program if you can attest to hardship; our office can help you with this but the Taxpayer Advocate Service (TAS) is only accepting very compelling cases with documentation. 

You can still get into currently not collectible status with the IRS. But it is impossible to reach someone on the phone live at the IRS but TAS is available. 

In terms of Offers in Compromise (OICs): 

  • Taxpayers are now given until July 15 for pending OICs to provide payments and information 

  • No pending OIC request will be closed before July 15 

  • OIC payments can be suspended through July 15 

  • No default for taxpayers delinquent in filing 2018 returns as part of OICs 

In terms of Earned Income Tax Credit and Wage Verification Reviews 

  • Taxpayers have until July 15, 2020, to respond to the IRS to verify that they qualify for the Earned Income Tax Credit or to verify their income.  

  • These taxpayers are encouraged to exercise their best efforts to obtain and submit all requested information, and if unable to do so, please reach out to the IRS indicating the reason such information is not available. Until July 15, 2020, the IRS will not deny these credits for a failure to provide requested information. 

In terms of certain Time-Sensitive Actions 

  • Deadlines extended until July 15, 2020 for time-sensitive actions like U.S. Tax Court petitions and reviews of decisions, Collection Due Process hearings, administrative refund claims, and refund lawsuits that were due to be performed on or after April 1, 2020 and before July 15, 2020