Now that the stimulus checks have all been sent out, many Americans are hesitant on using the funds. They aren't sure if the rumors they're hearing about the strings attached to them are accurate or not.
Now that we have all received our stimulus checks, we are now facing a slew of rumors and myths about the money we have received. This money was welcomed with open arms, helping pay bills, and keeping food on the table for many. Thanks to Social Media and other media outlets, and just the sheer amount of information (correct or not) that's available, rumors and misinformation have been spread about the realities of our stimulus checks. We are here to set the truth straight, calm your worries, and get rid of these myths once and for all.
According to AARP, once the CARES act went into action, the IRS sent out over 140 million stimulus checks. As this relief arrived and people started spending it, some hesitation did arise. The question if we will need to pay back the IRS and if these funds will be counted as part of our income in our 2020 taxes are at the forefront of this hesitation. With income and employment being so unstable, these are very understandable questions. Yes, this money is a blessing now. But, will it turn into a curse later?
First and foremost it is very important to know that you will not be paying back your stimulus checks. The IRS has even come out and said on multiple occasions that this will not be something that you will have to pay back. The stimulus check, according to CNBC, did get the nickname "recovery rebate" which is one of the main reasons why this concern began. Why won't you have to repay the IRS? That is due to the nature of tax credit the IRS is considering our stimulus checks. There is a certain type of tax credit, says Wealth Hacker Report Jeff Rose, called an Earned Income Tax Credit. These credits are completely refundable. Even if you don't owe any taxes at the end of the year, if you have any earned income tax credits, you will still be receiving a tax refund. This is how the IRS is treating your stimulus checks. It is something you're owed, not something you will have to repay. This is how those who don't file for taxes, like those who receive social security, disability, and railroad retirement benefits were eligible for a stimulus check. As long as you have a social security number and you meet the income requirements to receive a single or joint filing stimulus check, you will receive a stimulus check, with no strings attached.
Since the IRS is treating your stimulus check like earned income tax credit, it also will not be counted as part of your income when you file your 2020 tax return. You've received this money and it is taken care of, nothing else is required for you to do about it. Ironically, there is an opportunity for you to receive more money if your stimulus check wasn't calculated correctly by the IRS. These mistakes will most likely be caught when filing your 2020 tax return, or if you didn't claim a dependent child on your tax forms, or alert the IRS to a dependent child. You won't, on the other hand, be receiving any extra stimulus money when you file your 2020 tax return if you received the proper amount. The only way that will happen is if there is another stimulus check released, which for now is just a myth and rumor.
Also, know that the stimulus check will not reduce your refund that you're owed on your 2020 taxes. You will receive every penny that you're owed, and your stimulus check will not be deducted from it or even affect it. The stimulus check will also not lower the amount you owe in taxes, either. That can be confusing since other tax credits can reduce how much you owe. But, the stimulus check will not be one of them. At the end of the day, your stimulus check will not be affecting your 2020 taxes at all.
There have been some situations, according to CNBC, that some individuals have been overpaid and given more stimulus money than they should have received. If this happens, you will not have to pay that back either. This is incredibly rare though, and more often than not, is actually a scam. As we have mentioned in recent blogs, scams regarding the stimulus checks have become rampant since they were first released. If you receive a very official-looking check in the mail for more than your stimulus amount, and it is requested of you to pay back the difference in cash, certified check, money order, or in gift cards, that is without a doubt a scam. The IRS will not contact you via phone, social media, email, or texting. If you receive any messages about your stimulus checks through these platforms make sure to report them and then delete them right away.
We hope this insight helps you better understand your stimulus check, and what you are expected to do with them now that you've received them. If you have any further questions about them, or about the 2019 tax date that just passed us on July 15th, please don't hesitate to reach out. We will be very busy over the next couple of weeks, as we have been leading up to the 15th, but we will try and get back to you as quickly as possible. Don't forget! If you're looking for the best tax accountant in Summerville, the best tax services in Summerville, the best Quickbooks services in Summerville, and the best payroll services in Summerville, we are still here for you. Tax season may be over for some and just starting for others, and we will be here for you no matter what!
During one of the worst times in recent history, scams should be the last thing we should be worrying about. But, the truth of the matter is that new scams surrounding the stimulus checks and government bailout programs for small businesses are starting to come to life daily, and are more powerful than ever before.
Almost all of us have been anxiously awaiting the financial relief checks since the approval of the COVID-19 Relief Bill was passed. When will they get here? Who will receive them? How much will you get? On top of all these questions its a sad fact to share that during this terrifying time when we should all be standing together, stronger parties are trying to take advantage of those who have been the most affected by this devastating pandemic. Following in the footsteps of our recent blog about social security scams, we wanted to do a followup blog on the very real reality and the possibility of scams and frauds appearing right now. They could look like the relief checks, the key to getting your check quicker, small business loans, loans to help out larger companies, and even promising the cure for the pandemic all in exchange for your personal information.
Waking up every day to the news right now is difficult. The unknowns are overwhelming and the lines to get toilet paper are still ridiculous. In this time that has brought so many of us together, it is almost impossible to think that yet another attack could be upon us. While many are still working or now working from home, the hauntingly large numbers of those who are now facing unemployment due to the coronavirus are staggering. This is leaving thousands upon thousands of people without a paycheck, unable to provide for their families or even pay their simple bills. Businesses, even if they are still operating on a very small level or have been forced to close or made the conscious decision to close, are also losing money by the day. When the news came that the stimulus package had been approved and relief checks would soon be on their way, a collective sigh of relief was felt among all of us. New small business loans and other relief options for companies are now in place as well. We all will slowly be getting back on our feet, in very small steps one way or another. But, while we wait for these checks, scammers could be and are now rearing their very ugly heads saying that they have your funds and to receive them you must supply them with very personal and private information. Let us stop you right now, and say that is NOT how the stimulus checks will be handled.
You, the American citizen, don't have to do anything or file any kind of paperwork or to receive your stimulus check. The economic impact payment will automatically be deposited into your bank account that was connected to your 2018 and 2019 tax returns. Even if you have received your tax returns in the past as a paper check, the IRS will still deposit the funds into the account they have on file for you automatically. They will also calculate the amount you need based on your income over your 2018 and 2019 tax returns and your personal need. You won't have to do any calculations or send in any kind of paperwork. The IRS will not be contacting you in any way. The IRS did just announce that they will be releasing a brand new website that will allow you to see the status of your stimulus check when it will arrive, and it will also allow you to check the bank account or it is headed to. If there is a problem with the bank account number, you will need to change that right away on the IRS website. The IRS is making updates to their website almost daily, so if you have any questions make sure you visit their website.
We hate that these scams and schemes are very real right now. Since they are, we wanted to make sure that you are on high alert. All of these warnings also apply to small businesses and companies receiving financial support during this time. Please take comfort in the fact that the Department of Justice is forming a legal and integrative response to deal with these frauds. The US Attorney General's office has also developed a special task force along with appointed COVID-19 fraud coordinators to help deal with this situation. Here in the Lowcountry and throughout the state of South Carolina, our District US Attorney Peter M. McCoy Jr has also stated that his office and the department of justice are making this type of fraud a priority.
Scary times can become scarier. But, we are here to help all of you through it. Stay alert, stay safe, and stay home. We will get through this Summerville, we know it!
The Pathways Team