By, Rachel Gilmore
It is an inescapable fact that our lives are being run by COVID-19. We are in the midst of a global pandemic, experiencing urgency unlike we have ever experienced before. As a result, individuals are making decisions for their businesses that would normally take months over the course of a few hours. To help US citizens cope with this difficult time, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Marcum LLP, a public accounting and advisory services firm recently conducted a series of online webinars regarding the tax implications of the CARES Act for individuals as well as for businesses. With all of the news the general public has to currently digest regarding COVID-19, it can be easy to miss how the CARES Act can impact us on an individual level. Below you will find an abridged version of how the CARES Act and the stimulus checks that the internet is buzzing about impacts graduate students.
The rules are as follows:
1.) Checks will be received in payments of $1,200 per person and $2,400 per married couple. Additionally, $500 will be given for every “qualifying” child, meaning children under the age of 17. This is a sliding scale based on income. Lucky for grad students, we don’t exceed the $75,000 annual gross income. In case you were wondering, the threshold doubles for married couples. If you do by chance break the income threshold, the payment you receive will have a $5 deduction for every $100 earned over the income threshold. To do some of the math for you, an individual making $99,000+ or a couple making $198,000+ will not receive a check.
2.) Unfortunately, if you are a nonresident alien or a dependent, you are not eligible to receive a check.
3.) If you have already filed taxes for the 2019 year, the IRS will base your stimulus check on the most current numbers. However, if you haven’t, don’t worry; the IRS will base the decision on the 2018 tax return.
4.) You don’t have to do anything to receive the check. If you received your tax return with direct deposit, the IRS will use the same bank account for your stimulus check. If you don’t have direct deposit set-up, they will write out a check (disclaimer: receiving the check via the mail may take time).
5.) There is a “true up” on the 2020 tax return, as this is technically supposed to be based on 2020 information. This means that once the 2020 tax information is available, if you were underpaid with the original check, you are entitled to the rest of the payment. If the reverse occurs and you are overpaid, no one really knows what’s going to happen yet. The House version of the Act said that you are not obligated to repay the overpayment, but that it could be considered as taxable income. The Senate bill (which is the version that was eventually passed) is silent on what happens if you’ve been overpaid. Stay tuned for updates.
For more information on how the CARES Act influences retirement plans, businesses, or sick pay, feel free to visit http://www.marcumllp.com/coronavirus. Here you can find more guidance & insights on the impact of COVID-19, including helpful links to webinars.
Edited by Brittany Knight