Investor Column | Didn’t get your stimulus check? Here’s how you can still get paid
Hey, you get another chance to collect stimulus money. When COVID-19 struck, and the economy was tanking, the government rushed to send funds to struggling individuals and sick businesses. These payments averted a financial catastrophe.
What a mess! Initially, if taxpayers filed a 2018 or a 2019 tax return, funds were directly deposited into known bank accounts.
Millions of people aren’t required to file tax returns. So not surprisingly, they did not receive the first stimulus checks from the IRS. The economy is still hurting, and many people also didn’t receive a second stimulus check by Jan. 15, 2021.
Calculate the new Recovery Rebate Credit allowed when filing your 2020 tax return to obtain missing stimulus payments. This credit is refundable, even if you pay no income tax.
The logic is that some of you will use the rebate credit to pay additional taxes, for which there was no withholding, for 2020. But for most of us who didn’t receive stimulus checks, this will be our opportunity to collect the stimulus checks due us. This may apply if:
You were eligible but failed to receive a stimulus payment.
The government didn’t send you the full amount you’re entitled to.
Your income for 2020 is lower than in 2018 and 2019 and increases eligibility.
Failing to receive the full amount you’re entitled to.
Your 2020 income allows rebating.
New rules allow incarcerated individuals to receive payments.
After receiving the stimulus, you had a child.
Best of all, these payments aren’t taxable.
Qualifying for the full credit requires jumping through a few hoops. Income can’t exceed $150,000 for married filing jointly, $112,500 for Head of Household, and $75,000 for other taxpayers. Credit is reduced by 5% for adjusted gross incomes exceeding these thresholds.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-RELATED Tax Relief Act empower the new Recovery Rebate Credit. Amounts paid by these acts are considered Economic Impact Payments. The first advanced payments hit many accounts in 2020. Second stimulus payments were sent in early 2021 to further revive the economy.
First economic payments were $1,200 for singles, $2,400 for joint-filing marrieds, and another $500 for qualifying children below age 17. Second stimulus payments were smaller at $600 for singles and $1,200 for married filing jointly 2020. Another $600 goes to each allowable 2020 qualifying child.
Claim on your 2020 form 1040 or 1049-SR for seniors if you didn’t receive the full amounts of “both” stimulus payments yet. Use the Recovery Rebate Credit Worksheet in Form 1040 instructions to calculate your credit and see if you’re eligible.
Remember, you must be a US citizen or resident alien in 2020. You also can’t be claimed as a dependent of another taxpayer in 2020. And you need a social security number. Unless changed, on line 30 of this year’s 1040 line 30, insert your Recovery Rebate Credit.
When recalculating amounts due to you, you’ll need to verify the information. Check your account, soon if it’s up, at www.IRS.gov/account. Other information is available on IRS Notice 1444 for the first Economic Impact Payment. Use Notice 1444-B for calculating additional amounts due under the second economic stimulus payment.
Note if your spouse died before receiving a stimulus payment, they are not entitled to it. You will need to return checks or reimburse the Government if this applies to you and your family. Payments were calculated using 2018 and 2019 income amounts. Also, adoptions occurring in 2020 might deserve more stimulus money because the Government likely used 2018 and 2019 tax return calculations
Check the payment status on the IRS’s “Get My Payment” tool for updates and more information.
Jim Germer is a Bradenton CPA and financial adviser at 3655 Cortez Road W, Suite 110, Bradenton 34210. Call (941) 746-5600 or email jim.germer@ceterafs.com. Securities offered through Cetera Financial Specialists LLC (doing insurance business in California as CFGFS Insurance Agency) member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Cetera entities are under separate ownership from any other named entity.
This story was originally published January 21, 2021 at 6:00 AM.