Coronavirus Crisis: Direct Cash Payments

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Immediate Direct Cash Payments to Lower and Middle-Income Americans

The CARES Act provides for immediate, direct cash payments to lower-and middle-income Americans of $1,200 for each adult and $500 for each child, beginning to phase out at an annual income of $75,000 for an individual and $150,000 for a household.  These payments will provide individuals with the cash they need right now to survive with much of the economy currently shut down.

The Washington Post developed an online calculator, located here, that can help estimate what individuals could receive.

Information and guidance from the Internal Revenue Service about direct payments can be found here.

The IRS has created new online tools to help ensure Americans receive their Economic Impact Payments from the federal government. If you have previously filed taxes in 2018 or 2019 and are wondering when you'll receive your payment, you can track it by clicking here.

If you did NOT file federal income tax for 2018 or 2019, you are still eligible for a direct cash payment from the government. However, please remember that seniors who receive Social Security do not need to take any of these actions. The IRS “Non-filer Tool” provides a free and easy option designed for people who don’t have a return filing obligation, including those whose income doesn’t meet a certain threshold. You can find the tool by clicking here.

Questions and Answers about direct payments

Why is Congress proposing to pay direct cash payments to individuals?

The public health and economic consequences of COVID-19 are significant. These direct payments will help Americans afford what they need during this public health crisis, as many are experiencing a significant cash crunch due to a loss of income and added expenses.

When will the direct payments be distributed?

The Internal Revenue Service (IRS) will work to deliver the funds in the form of advance payments. For people who filed a federal income tax return in 2018 or 2019, payment processing will be based on payment or address information already on file with the IRS. Electronic distributions will be automatic to an account the payee authorized January 1, 2018 or later.

How large are the rebates?

The amount of the direct payments depends on family size. The payment is $1,200 for each adult individual ($2,400 for joint filers), and $500 per qualifying child under age 17. The direct payment is reduced by $5 for every $100 of income to the extent a taxpayer’s income exceeds $150,000 for a joint filer, $112,500 for a head of household filer, and $75,000 for anyone else (including single filers).

Do direct payments need to be repaid?

No, rebates do not need to be repaid. If an individual experienced an income loss in 2020 or if they have an increase in family size, they may be able to claim an additional credit of the difference when the individual files their 2020 tax federal income tax return in 2021.

How will direct payments be delivered?

It depends. Direct payments will be delivered automatically—by the IRS—to most Americans who file individual federal income tax returns. When available, electronic direct deposit will be used in place of mailing a physical check.

I am not typically required to file a tax return. Can I still receive my payment?

Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.

The IRS does not have my direct deposit information. What can I do?

In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

How will a person who has recently moved access a direct payment?

The IRS will determine payment delivery systems for everyone entitled to a direct payment.

Will the direct payment affect my eligibility for federal income-targeted programs?

No, direct payments are considered a tax refund and is not counted towards eligibility for federal programs.

What if I receive Social Security benefits? Will I receive a direct payment?

According to the U.S. Department of the Treasury, if you receive Social Security, retirement or other social safety net benefits, you may still qualify for direct payments. Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts. The IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate $1,200 Economic Impact Payments to Social Security recipients who did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits.

These payments will not be taxable nor represent “resources” for program eligibility purposes.

For the latest updates from the IRS on direct payments, click here; for the latest from the U.S. Treasury on direct payments, click here ; and for the latest updates from the Social Security Administration, click here.

What identification requirements apply to receive a direct payment?

Taxpayers must have Social Security Numbers for themselves and their qualifying children in order to receive direct payments.