Stimulus Checks are coming, and it's already a mess
The Economic Impact Payments, or stimulus checks, started arriving in people's bank account on Friday. It's Wednesday and it's already clear that the IRS has made a mess of things. My main focus is on Taxpayer Representation and Tax Resolution. I work in Hartford County CT with clients locally and throughout the country to resolve their tax problems. I've seen plenty of screw ups by the IRS, but I can't think of another one on this scale.
The good news is that most people aren't negatively effected by this. What should be happening is that everyone who has filed a tax return for 2018 and/or 2019, and their income is in range, should be getting a payment of up to $1,200. There's more if you have eligible dependents. If you want to know how much you should be getting, I wrote about that last week.
What has been happening? The first thing I noticed was deceased people getting payments. Even when there's been a return filed that specifically says they're deceased. If you are claimed as a dependent you are not supposed to get anything. I've had clients report that their dependent children have gotten the payment. People who have had their filing status change from Head of Household to Married Filing Jointly have reported getting paid twice. Right now it is unclear what is going to happen to the money that was paid out due to an error on the part of the IRS. In a general sense there is no repayment provision in the law for people who were eligible for more based on their 2019 return than what it will show on their 2020 return. But since these payments were made in error to people who aren't eligible at all, no one can say for sure just yet if the IRS will try to take this money back. If you've received a payment that you are not eligible for I'm currently advising people not to spend the money. We may never hear about it but the IRS could also realize what happened and try to take it back. That's just people who have gotten more than they were expect. There are people who aren't getting as much. Fortunately I've only heard of one scenario where this is happening, and that's for people with more than 4 qualified dependents. So far I've had one tax preparation client effected by this. The front of the 1040 only has room for 4 children, based on that it seems that their current system for calculating the amounts for people only looks at those 4. This is based on a sample size of 1 so what's actually happening could be different.
If you haven't received any payment then you can now check with the IRS. They launched a portal today where you can check on the status of your payment and update your bank info. I'm recommending that everyone who hasn't already gotten their payment should check with them. There's a long list of reasons why the IRS may not have your bank info and the only way to be sure is to check. Here's the link.
Feel free to post any questions you have below. If you're having any problems with the IRS that you need help with, contact me today so we can evaluate your situation.
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Windsor Locks, CT 06096