Is this payment considered taxable income?
No, the economic impact payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer’s refund or increase the amount they owe when they file their 2020 tax return next year. A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.
Why is my payment lower?
Some people who are eligible for the economic impact payment have received an amount smaller than they expected. If you filed your 2019 tax return but it was still processing at the time of the economic impact payment disbursement, t’s possible your payment could have been based on your 2018 tax return. If that is the case, you should be refunded any additional money that is owed to you when you file your 2020 tax return next year by the April filing deadline.
If by chance, you received additional economic impact money now, you will not be expected to pay that back in April 2020. This does not include economic impact payments that you should not have received – for instance, if someone passed away and a check was still sent. That money would need to be returned.
If I owe tax, or have a payment agreement with the IRS, or owe other federal or state debts or past-due child support, will my payment be reduced or offset?
No, with one exception. The economic impact payment may have been offset only by past-due child support. The Bureau of the Fiscal Service will send you a notice if an offset occurs.
If you are married filing jointly and you filed an injured spouse claim with your 2019 tax return (or 2018 tax return if you haven’t filed your 2019 tax return), half of the total Payment will be sent to each spouse and your spouse’s Payment will be offset only for past-due child support. There is no need to file another injured spouse claim for the Payment.
The IRS is aware that in some instances a portion of the payment sent to a spouse who filed an injured spouse claim with his or her 2019 tax return (or 2018 tax return if no 2019 tax return has been filed) has been offset by the non-injured spouse’s past-due child support. The IRS is working with the Bureau of Fiscal Service and the U.S. Department of Health and Human Services, Office of Child Support Enforcement, to resolve this issue as quickly as possible. If you filed an injured spouse claim with your return and are impacted by this issue, you do not need to take any action. The injured spouse will receive their unpaid half of the total payment when the issue is resolved. We apologize for any inconvenience this may have caused.
Please note: Federal tax refunds, including the Economic Impact Payment, are not protected from garnishment by creditors by federal law once the proceeds are deposited into a taxpayer’s bank account.
Some banks have seized stimulus payments from overdrawn accounts. Can they do this?
At this time, banks are officially allowed to retain funds from accounts with negative balances. Currently, there is nothing stated in the CARES Act to keep the banks from taking economic impact payments. The Treasury Department is working on this issue. Some banks have stated that they will temporarily stop garnishing funds from overdrawn accounts so people can access their economic impact payments.
Have questions about the economic impact payments or need help filing your tax return?
Peoples Tax is open for virtual tax preparation services, as well as drop-off tax preparation services at our two Richmond, VA tax office locations. Our tax professionals will meet with you by phone and email to interview you and answer all of your tax questions. All of our tax returns are backed by our Triple Guarantee! Give us a call at 804-204-1040 or email us at firstname.lastname@example.org to get started today!