You've probably heard that IRS will be making millions of ''economic impact payments'' (also called ''recovery rebates'') in the coming months to help people stay afloat during this time of economic uncertainty related to the COVID-19 crisis. Here's what you need to know about this program. 

 
Amount of payment. IRS will soon begin making payments of up to $1,200 to eligible taxpayers or up to $2,400 to married couples filing joint returns. Parents will get an additional $500 for each dependent child under age 17. Thus, the payment for a married couple with two children under 17 will be $3,400.

Who is eligible. U.S. citizens and residents are eligible for a full payment if their adjusted gross income (AGI) is under $75,000 (singles or marrieds filing separately), $112,500 (heads of household), and $150,000 (joint filers). The individual must not be the dependent of another taxpayer and must have a social security number that authorizes employment in the U.S.

Phaseout based on income. For individuals whose AGI exceeds the above thresholds, the payment amount is phased out at the rate of $5 for each $100 of income. Thus, the payment is completely phased out for single filers with AGI over $99,000 and for joint filers with no children with AGI over $198,000. For a married couple with two children, the payment will be completely phased out if their AGI exceeds $218,000.

How to get a payment. The vast majority of people won't have to do anything in order to get an economic impact payment. IRS will calculate and send the payment automatically to those who are eligible.

If you've already filed your 2019 tax return, IRS will use the AGI and dependents from that return to calculate the payment amount. If you haven't filed for 2019 yet, information from your 2018 return will be used.

IRS will deposit the payment directly into the banking account reflected on the return. IRS plans to develop a web-based portal for individuals to provide banking information to IRS, so that payments can be received as a direct deposit rather than by check sent in the mail.

People who are not otherwise required to file a tax return will need to file an abbreviated return to receive an economic impact payment. IRS will soon provide instructions on how to do this. This category includes low-income taxpayers, some veterans, and individuals with disabilities.

Social security recipients who aren't typically required to file tax returns won't have to file an abbreviated return to receive a payment. IRS will use information from social security Form SSA- 1099 or Form RRB-1099 to generate an automatic payment. The payment will be made by direct deposit or paper check, in the same manner as the recipient's regular benefits.

Payments nontaxable. Economic impact payments will not be included in the recipient's income for tax purposes.

Retirement accounts:

• Through the end of the year, individuals who are under 59 ½ years old can take up to $100,000 in coronavirus-related distributions from retirement plans without the usual 10% penalty for early distributions. The distributions may be repaid within three years and any resulting income inclusion can be taken over three years.

• If you were over 70 ½ at Dec. 31, 2019 you won’t have to take required minimum distributions (RMD) in 2020. If your retirement assets have taken a hit, not having to take an RMD may allow those assets to recover some value before you liquidate them. 

Student loans:
• If you have a federally-held student loan, your payments will be suspended through Sept. 30, 2020 and interest won’t accrue during this period. Note that this relief does not apply to private student loans.

Other benefits:
• Other benefits are available including expanded unemployment, emergency paid sick and family leave benefits (with some limitations and exceptions). Unemployment benefits are extended to self-employed and part-time workers. 

There are limitations on our physical work environment due to COVID-19; however, we’re working to minimize disruptions and impacts to you so that we can still offer the same level of superior service and support you have come to expect from our team.

We have implemented procedures to protect the health and safety of our staff, clients and community including restricting/limiting access to our offices, restricting/reducing travel, providing health education guidelines to keep our staff well, limiting the size of meetings, providing remote working solutions and other measures. 

 
Our firm is open to serve you 

Our firm remains open and available to serve you. 

Our commitment to you

Whether you have tax or financial planning questions or need advice on ways to navigate the expanded benefits outlined above, we’re here for you. If you have any questions or concerns, please don’t hesitate to contact us.

During this unpredictable and challenging time, it’s more important than ever to stay connected. We’re in this together and our thoughts go out to all that have been impacted by this unprecedented situation. 

Rest assured, we’re here to help with your questions.

Please let us know if you have any questions about the economic impact payments or any other COVID-19 issues.

Stay healthy and safe,

Orlando Gamarra, Jr., CPA
Partner (Bio)

SKJT&G LLP
Main Office 
5805 Blue Lagoon Drive, Suite 220 
Miami, FL 33126
Tel: 305.269.8633  
Fax: 305.265.0652
Website: www.skjtg-cpa.com

TAX ADVICE DISCLOSURE: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter. Please contact us if you wish to have formal written advice on this matter.