In response to the economic disruption caused by COVID-19, the CARES Act created funding for direct cash payments to individuals. Here are answers to some common questions our financial planning firm has received.
What is it? It is an advanced payment for a new refundable tax credit in the 2020 tax year.
Is the payment taxable? No, this payment is not taxable.
How many payments will there be? Only one payment is currently scheduled.
How much will I receive? Up to $1,200 for individuals, $2,400 for joint taxpayers, and $500 for each child under the age of 17 (qualifying child). The payments are subject to income limits, however.
Do I need to complete paperwork to receive a payment? No.
How will I receive my payment? Your payment will be direct deposited if your previous tax return contains your bank account number and routing number. If there is no bank account on file, the IRS will issue and mail a check to the address on file. After your money is direct deposited or a check is mailed, you will receive a notice from the IRS within 15 days confirming payment.
When will I receive my payment? The IRS is expected to begin direct depositing payments on April 9, 2020. It may be a few weeks before you receive your direct deposit payment.
The IRS will begin mailing checks on April 24, 2020. The schedule for mailing checks is based on your 2019 (or 2018 if you have not filed your 2019 tax return yet) AGI.