KTLA5 reports lawmakers struck a $2 trillion stimulus deal early Wednesday that includes sending checks directly to individuals amid the coronavirus crisis — but it will likely take until at least May before the money goes out.
Under the plan as it was being negotiated, single Americans would receive $1,200, married couples would get $2,400, and parents would see $500 for each child under age 17.
However, the payments would start to phase out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not qualify at all. The thresholds are doubled for couples.
About 90% of Americans would be eligible to receive full or partial payments, according to estimates by the Tax Policy Center. Lawmakers set aside $250 billion for the so-called recovery rebates.
Qualifying income levels will be based on 2019 federal tax returns, if already filed, and otherwise on 2018 returns. (Treasury Secretary Steven Mnuchin earlier this month delayed the filing deadline until July 15.)
There are provisions in the bill to include those who don’t earn enough to file returns, but some people may be missed, said Howard Gleckman, a senior fellow at the center.
Under the legislation being negotiated, lower- and middle-income Americans would receive just over two-thirds of the benefits, Gleckman said. An earlier version of the bill would have given lower-income households less or no assistance.
As for Mnuchin’s recent promise to send the checks in two weeks, that’s not likely to happen.
Who is eligible?
The bill makes clear that everyone is eligible except for nonresident aliens and those who can be used as the basis for deductions for another person.
“Seniors, veterans, the unemployed and low-income Americans would be eligible too,” Senate Finance Committee Chairman Chuck Grassley said Wednesday.
The bill text indicates those who receive social security can collect checks: For those not required to file 2018 or 2019 tax returns because of social security benefits, tax returns aren’t required to claim the money — the government can use information from a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement.
With that in mind, here is how much people can expect to get.
People filing individually
People who file their taxes as individuals are eligible for payments up to $1,200, but that decreases for people who earn more than $75,000 a year. The bill says that the payment is reduced by five percent of every dollar above that mark, or $50 for every $1,000 above $75,000.
What that ultimately means is that for people who make more than $75,000 the payment is less the higher their earnings are, with it being reduced to zero for those who make $99,000 or more.
People filing jointly
Couples who file a joint tax return are eligible for a payment of up to $2,400, plus and additional $500 per child. However, that amount decreases for couples who earn more than $150,000 in a year at the same rate of 5 percent of every dollar above that mark.
This translates to less money the more people make, with it being reduced to zero for joint filers without children who earn $198,000 or more.
People filing as heads of households
People who file as heads of households are eligible for payments of up to $1,200, but that amount is increased by $500 per child. That amount is reduced for people who earn more than $112,000 a year. The extent to which it is decreased, of course, depends on how many children they have, as illustrated by the chart above.
The following chart, courtesy of the Tax Foundation, illustrates how it all works.
Income is based on people’s tax filings for 2019, but if they have not filed for that year, then their filing for 2018 applies.
“[I]f the individual has not filed a tax return for such individual’s first taxable year beginning in 2018,” the bill says, the information should be used for 2019 provided in their SSA-1099 or RRB-1099 Social Security Benefit Statements.
When and how are payments made?
Payments, according to the bill, will be made “as rapidly as possible” and no later than Dec. 31, 2020. They will be made via direct deposit to an account that the person has authorized for tax refunds or federal payments on or after Jan. 1, 2018.
Notice will be sent to the person’s last known address within 15 days of payment informing them of the method and amount of payment. A phone number will also be provided so people can call the IRS in the event they did not receive it.