The IRS Warns That You May Need To Return Stimulus Money: What You Need to Know With the economic stimulus package comes economic relief to many who need it the most. However, with all government initiatives, there are strict guidelines and regulations that recipients should adhere to.
Recently, the Internal Revenue Service (IRS) warned that a large number of taxpayers may need to return their stimulus payments because they got more money than they’re eligible for. If you have already received your relief payment or are about to, here’s what you need to know about the potential return your hard-earned money.
What Is the IRS Stimulus Payment?
The IRS stimulus payment is part of the extension of the Economic Impact Payment (EIP) program to provide emergency financial assistance to American families and individuals who need it the most. The program is aimed to financially assist those who have been most affected by the ongoing economic crisis.
Who Qualifies?
The Economic Impact Payment is available to individuals in two categories, those who:
-Already filed their 2019 federal income tax return and received their refund
-Have yet to file their 2019 federal Income tax return until the CARES act went into effect
If you fall into either of these categories you may qualify for the Economic Impact Payment. Those who qualify are those that are U.S. citizens or permanent residents, have a valid Social Security number, and have an Adjusted Gross Income of less than $75,000 for individuals, or less than $150,000 for married couples filing jointly. Furthermore, if you have dependents then you may also qualify for additional services such as the Dependent Care Tax Credit, or the Child Tax Credit.
How are Stimulus Payments Calculated?
Your Economic Impact Payment is determined by your Adjusted Gross Income (AGI). Generally speaking, those who have an AGI of less than $75,000 for individuals and below $150,000 for married couples filing jointly will receive the full payment. The total amount you get is determined by your AGI, filing status, and the number of dependents you have.
The maximum payment is $1,200 per taxpayer, with an additional $500 per dependent. The payment you receive is reduced by $5 for every $100 of AGI that exceeds the limits.
How Are They Paid Out?
The actual payment will be either mailed to you via a check, or directly deposited into your bank account.
What If I Received an Excessive Amount ?
The IRS has warned that millions of taxpayers may have received an excessive payment, due to an error in deductions, income, or estimated taxes. If this is the case, you may need to return the money. The IRS will be sending out letters to taxpayers who need to return a payment, starting in October 2020.
How Do I Return the Money?
If you have already received an excessive amount, the IRS recommends that you return the money through one of the following methods:
-Via Direct Deposit:
Open the Get My Payment tool on the IRS.gov website, select “Return Payment” and follow the instructions.
-Via Check or Money Order:
Write the check or money order for the amount of the payment made to the U.S. Treasury. Include your name, address, Social Security number, and “2020EIP” on the check. Mail the payment to the IRS location indicated in the notification letter you received.
Can I Keep Any Part of the Excessive Payment?
If you received a payment in error, you must return the full amount. You cannot keep any part of the payment as the money is intended to cover the exact amount of taxes owed. Any additional funds you received must be returned to the IRS.
What If I Don’t Receive the Notification Letter?
If you did not receive the notification letter, but still believe that you received an excessive payment, contact the IRS directly by calling their hotline number.
The amount of stimulus money you receive is based on your Adjusted Gross Income (AGI). You could receive a lesser or greater amount, depending on your filing status, number of dependents and other data.
Unfortunately, due to errors in deductions, income, or estimated taxes, the IRS has warned that millions of taxpayers may have received an excessive amount of money. If this is the case, the IRS is sending out letters to those taxpayers who need to return a payment.
It is important to note that if you received a payment in error, you must return the full amount, and you cannot keep any part of the payment. If you have not received a notification letter, contact the IRS directly.
Once you receive a payment, make sure to review it to make sure it was the correct amount. If you find that you have received an excessive amount, it is important to return the money according to the instructions given by the IRS. That way, you can make sure that you are in compliance with tax laws and regulations and avoid any potential penalties or issues in the future.
