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New Economic Impact Payment FAQs Include Answer About Prepaid Debit Cards

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

IRS has provided additional information, in the form of FAQs, about economic impact payments under the CARES Act. One FAQ provides that economic impact payments may, in some cases, be sent to the taxpayer’s prepaid debit card.

Background.

As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, PL 116-136, 3/27/2020), IRS is making economic impact payments (EIPs) to certain taxpayers.

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an EIP of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child under the age of 17 as of the end of 2020.

Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment.

For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.

IRS has previously answered questions on the EIP. See, for example, Economic impact payment FAQs include rules on when payments must be returned.

IRS’s Non-Filers: Enter Payment Info Here website can be used by those persons who didn’t file or aren’t obligated to file a federal return, including those with income below the filing threshold, to provide information to IRS so that they may obtain an EIP. See IRS launches new on-line tool to help non-filers register for Economic Impact Payments.

The IRS’s “Get My Payment” web application: a) shows taxpayers either their EIP amount and the scheduled delivery date of the EIP by direct deposit or paper check, or that a payment hasn’t been scheduled; and b) allows taxpayers who did not use direct deposit on their last filed tax return to provide their direct deposit information which will speed their receipt of their EIP. See IRS creates website to help persons entitled to economic impact payments.

New and updated FAQs.

IRS has provided the following information via new and updated FAQs:

EIP amount issues.  

The following is updated information about EIP amounts:

Q29. I think the amount of my EIP is incorrect. What can I do?

IRS previously provided information on this subject. See IRS answers questions about why EIPs may be a different amount than expected. It adds the following: Keep the Notice 1444, Your EIP, that you will receive regarding your Economic Stimulus Payment with your records. This notice will be mailed to each recipient’s last known address within a few weeks after the Payment is made. When you file your 2020 tax return next year, you can refer to Notice 1444 and claim additional credits on your 2020 tax return if you are eligible for them. IRS will provide further details on IRS.gov on the action they may need to take.

Q30. What if a child’s parents who are not married to each other both got the $500 for a child – will one of them have to pay that back?

There is no provision in the law requiring repayment of a Payment. Instead, each parent should review Notice 1444 that IRS will mail to their last known addresses within 15 days after the Payment is made. The parents should keep the notices for their 2020 tax records.

Receiving the EIP.

The following is updated information about receiving EIPs.

Q33. How will IRS know where to send my Payment?
If you filed your 2019 or 2018 tax return but did not receive your refund by direct deposit, your Payment will be mailed to the address IRS has on file even if you also receive Social Security, Railroad Retirement or Veterans Affairs benefits by direct deposit. This is generally the address on your most recent tax return or as updated through the United States Postal Service (USPS).

Q34. What if the bank account number I used on my recent tax return is closed or no longer active? Can I switch and be mailed a Payment?

If the account is closed or no longer active, the bank will reject the deposit, and you will be issued a check that will be mailed to the address IRS has on file for you. This is generally the address on your most recent tax return or as updated through the USPS. You do not need to call IRS to change your Payment method or update your address at this time.

Q35. I already filed my 2019 tax return and owed tax. I scheduled a payment (electronic funds withdrawal, Direct Pay, or Electronic Federal Tax Payment System (EFTPS)) from my bank account. Will IRS send my Payment to the account I used? 

No, IRS will not send Payments to accounts used to make a payment to IRS.

Q36. I already filed my 2019 tax return, but I didn’t provide bank information. Can I use the Non-Filers: Enter Payment Info Here tool to provide my banking information?

No, the Non-Filers: Enter Payment Info Here tool cannot be used if you already filed a 2019 tax return.

Q40. Where did you get the bank information for me, and what if I need to change it?

Your bank account information is obtained from the most recently filed tax return or from the Get My Payment application if you provided the information through it. If you haven’t filed a 2018 or 2019 tax return and you received SSA, RRB or VA benefits, your bank account information may be obtained from SSA or VA. You will receive your Payment as a direct deposit or by mail, just as you would normally receive your benefits. You will not be able to use Get My Payment to provide your bank account information.

Q44. Can I have my EIP sent to my prepaid debit card?

Maybe. It depends on your prepaid card and whether your payment has already been scheduled. Many reloadable prepaid cards have account and routing numbers that you could provide to IRS through the Get My Payment application or Non-Filers: Enter Payment Info Here tool. You would need to check with the financial institution to ensure your card can be re-used and to obtain the routing number and account number, which may be different from the card number. If you obtained your prepaid debit card through the filing of a federal tax return, you must contact the financial institution that issued your prepaid debit card to get the correct routing number and account number. Do not use the routing number and account number shown on your copy of the tax return filed. When providing this information to IRS, you should indicate that the account and routing number provided are for a checking account unless your financial institution indicates otherwise.

Non-Filer tool.

The following is updated information about the Non-Filer tool.
Q46. Do I need to use the Non-Filers: Enter Payment Info Here tool if I am not required to file a federal income tax return for 2019 or 2018 and I do receive federal benefits for Social Security retirement, disability (SSDI), Supplemental Security Income (SSI) or survivor benefits, Veteran’s benefits, or Railroad Retirement benefits?

No. To get a $1,200 Payment, you don’t need to use Non-Filers: Enter Payment Info Here. IRS will automatically direct deposit or mail your EIP to where you normally receive your benefit.

If your spouse didn’t receive federal benefits in 2019 and is not required to file a federal income tax return for 2019 or 2018, you may provide additional information using the Non-Filers: Enter Payment Info Here tool to get your EIP of $2,400 for you and your spouse plus the additional amount if you have qualifying children under age 17.

Social Security, Railroad Retirement and Department of Veteran Affairs benefit recipients.

IRS has added this new section of FAQs.

Q48. Do Social Security, Railroad Retirement and Department of Veteran Affairs benefit recipients need to take any action?

Please review all scenarios below to determine if action is needed.

If you have not filed a 2019 or 2018 tax return and are NOT required to file, and you do not have a spouse or qualifying children to claim:

…You do not need to take any action. You do not need to contact IRS, Social Security Administration (SSA), the Railroad Retirement Board (RRB) or Veterans Affairs. IRS will use the information from your 2019 benefits to generate a Payment to you. You will receive your automatic Payment as a direct deposit or by mail, just as you would normally receive your federal benefits. For example, if your benefits are currently deposited to a Direct Express card, your EIP will also be deposited to that card. If your benefits are currently deposited to your bank account, your EIP will also be deposit to that account. You can check the Get My Payment for the status.

If you have already filed a 2019 or 2018 tax return:

You do not need to take any action if you already filed a tax return (this includes filing a joint return with your spouse). IRS will use information on your tax return to determine if you are eligible for the EIP. If you haven’t filed a 2019 return yet but did file a 2018 return or if IRS has not finished processing your 2019 tax return, IRS will send the EIP automatically using the information provided on the 2018 tax return. If your return included information on your direct deposit account for any tax refund, the Payment will be sent to the same account. You can check the Get My Payment application for the status of your Payment.

IRS won’t have direct deposit information if you owed tax, applied your refund to the 2020 estimated tax, or received a refund check instead of a direct deposit on the most recently filed tax return.

If you have not filed a 2019 or 2018 tax return and are required to file:

If you are required to file a tax return or plan to file to claim certain credits, you should file your 2019 return as soon as possible to receive your EIP. Consider using IRS Free File to electronically file your return. Filing electronically and using the Direct Deposit option is the fastest and most secure way to get your refund and EIP.

If you don’t provide direct deposit refund information or owe tax when you file your 2019 return, IRS will schedule your Payment to be issued by mail to the address you provide on the return.

Do not use the Non-Filers: Enter Payment Info Here tool if you are required or plan to file a 2019 tax return. Using the Non-Filers: Enter Payment Info Here tool will make it necessary for you to amend your tax return which, in turn, delays the processing of the tax return and any tax refund claimed on it. Moreover, a delay in processing of your tax return will lead to a delay in your EIP.

…If you have not filed a 2019 or 2018 tax return and are NOT required to file, and you have a spouse or qualifying children to claim:

The benefit recipient will receive an automatic $1,200 Payment. If your spouse is also a benefit recipient, your spouse will also receive an automatic $1,200 Payment. If you did not register your spouse or a qualifying child using the Non-Filers: Enter Payment Info Here tool before your Payment was scheduled, you and your spouse will each receive an automatic Payment separately. The additional amounts for any qualifying child will be paid based on the 2020 return that you will file in 2021.

However, while the benefit recipient can no longer use the Non-Filers tool to add their spouse or qualifying children, people in this group may have a spouse who is not receiving Social Security, Railroad Retirement and VA benefits separately. To receive an EIP, an eligible non-beneficiary spouse may need to take action to receive their $1,200 Payment.

A non-beneficiary spouse of a benefit recipient can still use the Non-Filer tool to get their $1,200 and add any qualifying children if the spouse is an eligible individual and is not required to file a tax return, even if the benefit recipient missed an earlier deadline to do so. If eligible, your spouse may use the Non-Filers tool only if your spouse is not required to file a return for 2019 or 2018 and has not been issued their own EIP. Your spouse should enter information as a “Single” filer in the tool instead of Married Filing Joint.

Caution: Do not use the Non-Filer tool if you are required to file a return. This will delay your EIP and prevent you from filing your tax return electronically.

Note: Direct Express Account Holders: If you use the Non-Filers tool, you cannot receive your payment on your Direct Express card. You may only select a bank account for direct deposit or leave bank information blank and receive the Payment by mail.

If you were claimed as a dependent on someone else’s return:

You do not need to take any action. You do not qualify for the EIP if you can be claimed as a dependent on someone else’s tax return. However, if you are not someone’s dependent in the 2020 tax year, you may be able to claim the credit by filing a 2020 tax return in 2021.

Q49. When will eligible Social Security, Railroad Retirement and Department of Veteran Affairs benefit recipients who are not required to file a tax return receive their EIP?

Most Social Security and Railroad Retirement recipients who receive a Form SSA-1099 or RRB-1099 have already been issued their EIP. You can check the Get My Payment application for the status of your Payment.

Supplemental Security Income (SSI) and Veteran benefit recipient will start receiving their EIPs mid-May. They can check the Get My Payment application for the status of their Payment.

Note: The Get My Payment application will show “Payment Status Not Available” until the payment is being issued. This response does not mean you are not eligible or will not receive a Payment.

If you used the Non-Filers tool, however, your Payment will generally be issued within two weeks from the date when you used the tool.

Q50. How much will Social Security, Railroad Retirement and Department of Veteran Affairs benefit recipients receive?

If you did not file a tax return or use the Non-Filer tool to claim a spouse or any qualifying children, your EIP will be $1,200.

If you filed a tax return or used the Non-Filer tool to claim a spouse or qualifying children, your EIP will be based on the return filed or the information you entered in the Non-Filer tool.

Q51. Do I need to do anything if I am the spouse of an SSA, SSI, RRB, or VA recipient?

The answer to this question depends on your situation. Please review the scenarios below to see which fits your situation and if any action is required.

...You were claimed as a dependent on someone else’s tax return and are 17 or older:

You do not need to take any action. You do not qualify for the EIP if you can be claimed as a dependent on someone else’s tax return. However, if you are not someone’s dependent in the 2020 tax year, you may be able to claim the credit by filing your 2020 tax return in 2021.

If you already filed a 2018 or 2019 tax return:

You do not need to take any action if you already filed a tax return (this includes filing a joint return with your spouse who receive the Federal benefits). IRS will use information from your tax return to determine if you are eligible for the EIP. If you haven’t filed a 2019 return yet but did file a 2018 return or if IRS has not finished processing your 2019 tax return, IRS will send the EIP automatically using the information provided on the 2018 tax return. If you included information on your direct deposit account for any tax refund, the Payment will be sent to the same account. You can check the Get My Payment application for the status of your Payment.

IRS won’t have direct deposit information if you owed tax, applied your refund to the 2020 estimated tax, or received a refund check instead of a direct deposit on the most recently filed tax return.

…If you did not file a 2019 or 2018 tax return and are required to file:

If you are required to file a tax return or plan to file to claim certain credits, you should file your 2019 return as soon as possible to receive your EIP. Consider using IRS Free File to electronically file your return. Filing electronically and using the Direct Deposit option is the fastest and most secure way to get your refund and EIP.

If you don’t provide direct deposit refund information or owe tax when you file your 2019 return, IRS will schedule your Payment to be issued by mail to the address you provide on the return.

Note: If you are also an SSA, RRB, SSI or VA recipient, it is possible you may receive the EIP based on your benefits, before your 2019 return is processed.

Do not use the Non-Filers: Enter Payment Info Here tool if you are required or plan to file a 2019 tax return. Using the Non-Filers: Enter Payment Info Here tool will make it necessary for you to amend your tax return which, in turn, delays the processing of the tax return and any tax refund claimed on it. Moreover, a delay in processing of your tax return will lead to a delay in your EIP.

You also receive SSA, SSI, RRB, or VA benefits and are not required to file a return:

If you are also a benefit recipient, you should receive your EIP automatically. If you did not register your spouse or a qualifying child using the Non-Filers: Enter Payment Info Here tool before your Payment was scheduled, you and your spouse will each receive an automatic Payment separately if you are both eligible. Neither you nor your spouse can use the Non-Filers tool to add qualifying children since the deadline to do so has passed. The additional amounts for any qualifying child will be paid based on the 2020 return that you will file in 2021.

If you used the Non-Filer tool or your spouse used the Non-Filer tool and included you as their spouse, check the Get My Payment application for the status of your Payment. It should be scheduled within two weeks from the date when you used the tool. Until the Payment is scheduled, the application will show “Payment Status Not Available.”

If your spouse has already received their Payment and you have not, check the Get My Payment application to see if your Payment has been scheduled.

…Your spouse already received their $1,200, you are not a benefit recipient and are not required to file a 2019 tax return:

If you are eligible, use the Non-Filers: Enter Payment Info Here application to provide simple information so you can get your payment. You should enter your information as a “Single” filer in the tool instead of Married Filing Joint.

Mailing back an erroneous EIP. 

In its previous set of EIP FAQs, FAQ 48 provided addresses to which recipients of erroneous paper check EIPs should be mailed. IRS has renumbered the FAQ as FAQ52 and added a new address for taxpayers who live in a foreign country, U.S. possession or territory, or use an APO or FPO address, or file Form 2555 (Foreign Earned Income) or 4563 (Exclusion of Income for Bona Fide Residents of American Samoa), or are a dual-status alien.

To continue your research on information about economic impact payments, see FTC 2d/FIN ¶A-4460.

 

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