Several weeks ago, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included individual stimulus checks for more than 100 million Americans. Now, the Internal Revenue Service (IRS) has announced 50 to 70 million people should expect their money this week.
“That will primarily be people who claimed a refund and asked it to be deposited to their bank account in 2018 or 2019 or Social Security beneficiaries,” said Bob Probasco.
Probasco is the director of the tax clinic at Texas A&M University.
“The payment by checks will take longer,” Probasco added. “A lot longer, potentially.”
Last week, the IRS revealed an updated timeline of when stimulus checks would arrive for different groups of people. Those who have direct deposit information on file with the IRS will get checks the fastest. The IRS expects most with that information on file, from their 2018 or 2019 tax refund, will get their stimulus money by April 15. Those who have direct deposit information on file because they get Social Security benefits distributed that way, should also expect to receive money around the same time.
Around April 24, the IRS expects to start issuing paper checks. However, it can only issue 5 million checks a week. At that rate, it’s warning some people could be looking at getting a check in August or September.
To help most Americans avoid this delay, the government set up a website for individuals who did not file a tax return for 2018 or 2019 because they had no income, earned less than $12,200 a year, or did not file for another eligible reason.
A second website is being launched later this week for those who filed taxes in 2018 or 2019 and need to update their direct deposit info or need to set it up with the IRS. You’ll also be able to check your payment status on this site as well.
Links for both sites can be found on the IRS’s website here .
“The government is going to be sending out, over the course of this year under this program, somewhere in the neighborhood of $290 to $300 billion,” said Probasco. “What happens when those amounts of money is out there? There are a lot of scammers.”
The IRS has issued warnings about scammers, either calling over the phone or sending an email, claiming to help you set up direct deposit for your stimulus check.
Probasco warned the IRS almost never initiates contact with a taxpayer by phone or email; they correspond by mail. In fact, after stimulus checks are sent out, expect a letter from the IRS confirming your payment and what to do if you did not receive it. Some people believe that the stimulus payments are taxable, or must be paid back next year. According to CNBC, that is not true. CNBC says that the stimulus checks are not taxable income, and are structured as refundable tax credits. That is why even people who do not typically file tax returns qualify for these payments, according to the Tax Foundation, an independent think tank.
The financial website Money.com also addressed the issue and posted: "Will this eat into my tax refund for 2020? No. The ‘advance’ you’ve been hearing about is in reference to a special tax credit that’ll appear on the tax return you file in 2021 for the 2020 tax year — a tax credit that wouldn’t have been there if it wasn’t for these stimulus checks. So the Internal Revenue Service isn’t giving you some of your 2020 tax refund upfront. The stimulus check will be in addition to what you would’ve otherwise expected.Will it count towards my taxable income for 2020? No. This money is not considered income. It won’t be taxable and it won’t affect your income tax bracket for 2020."