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How Do My Clients Qualify for an Economic Impact Payment?

Working remotely, rotating shifts, face masks, and social distancing are all becoming normal parts of our daily life in the US due to precautions taken to slow the spread of COVID-19. The sad reality is that these concessions aren’t available to everyone. Many Americans have lost their jobs in the wake of stay-at-home orders, since their workplaces—restaurants in particular—have been forced to temporarily shutter, and school closures have made the childcare arrangements exponentially more difficult.

What are Economic Impact Payments?

Regardless of the specific financial hardship, Congress recently passed the $2 trillion CARES Act, which includes a provision for Treasury-issued Economic Impact Payments (EIPs) to Americans who fall below specific AGI thresholds listed in the Economic Impact Payment Information Center on IRS.gov:

  • $75,000 for individuals
  • $112,500 for head of household filers and
  • $150,000 for married couples filing joint returns

The IRS also lists the AGI phase-out range for reduced payments:

  • $75,000 and $99,000 if their filing status was single or married filing separately
  • 112,500 and $136,500 for head of household
  • $150,000 and $198,000 if their filing status was married filing jointly

As you might suspect, the IRS is determining eligibility based on information listed in tax returns. The agency says that they’re using tax-year 2018 and 2019 returns to determine eligibility for an EIP. Since the majority of taxpayers have filed a return for one of those years, the IRS has said that those individuals won’t have to do anything else to receive an EIP.

Since the IRS is able to gather EIP-qualifying information from Forms SSA-1099 and RRB-1099, Social Security beneficiaries also won’t have to do anything to receive a payment. Unfortunately, there is a group of Americans who seemingly fall through the cracks: those who don’t normally have to file a return and don’t receive Social Security benefits.

How do non-filers who don’t receive Social Security benefits get an Economic Impact Payment?

Early guidance from the IRS said that non-filers who don’t receive Social Security benefits will need to file a “simple return” to receive an Economic Impact Payment. Many professional tax software companies have developed a simple filing option for this segment of the population—some of which are referring to it as an “EIP return.”

Essentially, you collect basic filing information from your client, like name, Social Security Number, date of birth, qualifying dependents, and physical address. If the client prefers receiving their EIP via direct deposit, they will also need to supply banking information. That said, the IRS is also reportedly developing an online portal for IRS.gov that affected non-filers can use to report this information.

We expect the IRS will issue more guidance related to the EIP program, so make sure to check back with us next week.

Sources:Economic Impact Payment Information Center”; “Social Security Recipients Will Automatically Receive Economic Impact Payments

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