The first round of the 2020 economic impact payment is a refundable tax credit on your 2020 tax return that has been issued in advance by the federal government based on the adjusted gross income reported on your 2019 or 2018 tax returns. Each qualifying adult will receive $1,200 and $500 for each qualifying child. The credit is limited for taxpayers with income over certain limits. While the IRS has not issued the exact form to calculate the amount of the credit on your 2020 return, the IRS has said that if your 2020 income rises, you will not have to repay the credit if you were eligible on either your 2019 or 2018 returns.
The credit is based on your Adjusted Gross Income.
This is your income before you take the standard or itemized deduction or claim the Qualified Business Income Deduction. The IRS will look at your 2019 return first, and if you have not filed 2019, then they will look at your 2018 return.
- If your filing status is single or married filing separately and your Adjusted Gross Income (AGI) is over $75,000, then your credit will begin to be reduced by $5 for every $100 above the AGI limit. By multiplying the amount of your AGI over $75,000 by .05, you will be able to calculate how much your stimulus check will be reduced. If your AGI is $87,000, you would multiply the amount over $75,000 ($12,000) by .05 and see that your check would be reduced by $600.
- For married filing joint returns, the same idea applies, however the AGI range is from $150,000 to $198,000. If your AGI is $188,000 in 2020, then you would have a reduction of $1,900 ($188,000 – $150,000 = $38,000; $38000 * .05 = $1,900).
- For the head of household filing status, the AGI range is from $112,500 to $136,500.
- For each qualifying child, you will receive an additional $500, which increases the top of the phase-out range by $10,000. So, if you are married with 1 qualifying child, then you would receive $2,900 with AGI below $150,000 and would not receive any check if your AGI is above $200,800.
If you feel that the amount of your stimulus check is incorrect, the IRS has not issued a method at this time to receive any additional amount. However, you will be able to calculate the amount of the stimulus check on your 2020 return, and if you received less than the amount you were entitled to, then you can claim the additional credit on your 2020 return.
More information is being released and updated daily at the IRS website: https://www.irs.gov/coronavirus/economic-impact-payment-information-center.
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