Part 2 of a series. Covers the change to the US Federal tax return filing deadline and the direct payment.
The Coronavirus Aid, Relief, and Economic Response (CARES) Act includes aid for regular Americans. This article covers two of those items: additional time to deal with Federal taxes and direct payments to individuals.
Please note: before taking action based on this information, please do your own research, including speaking with your CPA, financial advisor or planner, employer, loan servicer, state unemployment office, and heck, maybe even a priest or shaman. My goal is to share my best understanding and to be of service. I hope you find this helpful.
On February 20th, 2020 the first of a series of U.S. stock market drops began in response to the global pandemic and concerns about the effect the disease would have on economic activity worldwide.
On March 21, 2020, an unprecedented spike in first time jobless claims was announced by the Labor Department. There had been 3.2 million first time unemployment claims. The single largest week record before then was for 700,00 back in 1982. Check out this article from Business Insider for details.
On March 27th, the CARES Act was signed. This law provides for loans to corporations, small business loans, household payments, unemployment insurance, tax deferrals and deadline extension, and other funds. Most of the “goodies” we are interested in are in this act.
This article covers two of those goodies: the change to the Federal tax deadline and the payments to individuals. Details are outlined below.
1) Extension to both file and pay 2020 Federal taxes from 4/15 to 7/15. Note: while most states have followed suit, not all have (Mississippi is Mississippi-ing again. Check with your state and this article for more details.).
2)Direct payments to individuals. This is why you came here, right?
It is my understanding that if you in the past got your refund via direct deposit, this money will come in via that same process. You do not need to take any action.
Please be very cautious as scammers are sadly taking advantage of the opportunity. If you receive a phone call asking for a bank account or card number in order to get you this money or expedite this process, please do not give out any personal information related to your bank account or social security number. Older folks are especially at risk from these types of scams, so please reach out to them to help them avoid becoming a victim.
If you have always been a paper check person and can wait for the paper check, I recommend you do so to avoid scams. However, if you have an emergency situation and cannot wait, the IRS is planning to set up a site to let you give them your bank account details. Be very sure you are on the IRS's site when you do this. More information is available at the IRS website.
Most individuals will receive a one time payment of $1,200 each. Kids are worth $500 each, which should cover roughly two to three of the panic grocery shopping trips you did when this whole thing kicked off.
Upper income earners will see the payments begin to phase out for incomes between $75,000 and $99,000. If you are married filing jointly, the phase out begins at $150,000. The number used to determine this payment will be what you show as your annual income for the most recent tax filing (so 2018 if you have not yet filed for 2019. 2019 if you already got this latest tax return in or can do so before they get to you.)
Journal questions:
What would be the highest and best use of this direct payment?
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