I know many of you are interested in the details of the Covid-19 relief stimulus law, so I will attempt to provide some important information here:
- The tax rebates are an a NON-TAXABLE advance payment of a special 2020 tax credit. So you get the money now and then reconcile it against the credit when you file for 2020. The good news is that if you are overpaid now you will NOT have to repay it when you file in 2020. Even more good news is that if you are underpaid now you WILL get the extra money when you file in 2020. A win-win for taxpayers!
- You will get your payment faster if the IRS has your direct deposit information. Use the “get my payment” tool at IRS.gov.
- If you are waiting for payment via paper check, be patient. The more money you made in 2019 (or 2018 if you haven’t filed 2019) the longer your wait will be. Taxpayers at the higher end of the qualifying income range may not get their payments until September 2020.
- The tax rebates will not be seized by the IRS to offset past due taxes or other federal or state debt EXCEPT for back child support
- If you have a child in 2020 you will not get the extra $500 this year but will get it when you file your 2020 income tax return (in 2021).
- If you don’t file a tax return but do receive Social Security, Social Security Disability Insurance, veterans benefits, Supplemental Security Income or Railroad Retirement Benefits, you will get paid automatically.
- If your small business gets a Paycheck Protection Program (PPP) loan and that loan is forgiven, the cancelled debt in NOT taxable.
- Unemployment benefits ARE taxable federally but NOT subject to NJ income tax.
- Scams involving tax rebate payments and PPP loans are on the rise! Watch for scammers calling or emailing you suggesting you will get your money faster if you provide your financial information to them. The IRS will generally not contact you by phone or email about tax matters. They will send a letter. And the IRS will NOT ask for personal or financial information via phone, email, text or social media.
- The IRS is slowly reopening. Some workers are returning to handle mail, process paper returns, answer questions and issue checks. But staffing is not expected to be back to normal anytime soon and service is slower than usual (surprise!). Returning employees are getting incentive pay and must wear masks.
If you have any questions please do not hesitate to contact me. I am still working from home and can be reached on my cell phone at (732) 822-6890.
Stay safe and be well.
I help clients reduce taxes, increase profitability, meet reporting requirements and save valuable time. Contact me to find out how!