Tens of millions of families are suffering the economic impact of the coronavirus pandemic, as many employers have told workers to stay home or laid them off entirely. Many of those families are desperately waiting for promised financial relief from the federal government. Coronavirus stimulus checks are reportedly on their way right now, and some people have already received their payments.
As hard-hit families try to figure out whether they'll get money in a stimulus check, they're naturally turning to the IRS for guidance. Yet some of the information you'll find on the IRS' own Economic Impact Payment Information Center is misleading, at best, and could lead you to believe you're not going to get the stimulus check you actually deserve. Below, you'll find the correct information about stimulus checks and whether you qualify to get one.
Do you deserve a stimulus check?
Under the CARES Act, which established the guidelines for Americans to receive stimulus checks, most adults qualify to get $1,200 from the federal government. Certain children will qualify for an additional $500 in stimulus relief.
However, some people won't get the full amount in their stimulus checks. In order to qualify for the entire amount, your income has to be less than $75,000 for single filers, $112,500 for heads of households, or $150,000 for joint filers. Above those limits, your stimulus check will shrink. When your income hits a certain point, you won't get a check at all.
The big confusion about stimulus check eligibility
Where things get confusing, though, is exactly what income level makes your stimulus check disappear entirely. The IRS website states the following about who's eligible to get a check:
Taxpayers will receive a reduced payment if their AGI is between:
• $75,000 and $99,000 if their filing status was single or married filing separately
• $112,500 and $136,500 for head of household
• $150,000 and $198,000 if their filing status was married filing jointly.
This implies that if your income is above those amounts, you won't qualify for any stimulus check under any circumstances.
Later, the website talks about who's not eligible and includes the following information:
Taxpayers likely won't qualify for an Economic Impact Payment if any of the following apply:
• Your adjusted gross income is greater than
° $99,000 if your filing status was single or married filing separately
° $136,500 for head of household
° $198,000 if your filing status was married filing jointly.
Again, it seemingly couldn't be clearer: Make more than those amounts, and you shouldn't expect a check.
But that's not how the phase-out provisions work!
The problem with this IRS information is that it's only correct for those who don't have eligible children. Those who do have kids who qualify -- typically any child 16 or younger who lives with you and you support -- could still get stimulus checks even if their incomes are higher.
The reason? The phase-out provisions reduce your stimulus check by $5 for every $100 you make over the lower thresholds. So a single person with $75,100 in income will see their check reduced by $5, while someone with $75,200 will get a $10 reduction, and so on.
The IRS numbers are correct for those who don't have eligible children. But for those who do, the maximum income limitations are incorrect. You could make more and still get a partial payment.
For example, take a married couple with two children who file jointly. They would expect total payments of $3,400. If they make $200,000, then they'd be $50,000 over the lower threshold. They'd therefore see their check fall by $5 for each $100 of that $50,000. That adds up to a $2,500 reduction. But because their kids entitle them to a $3,400 payment, they'd still get a reduced stimulus check in the amount of $900.
Do your own math
Further down, the IRS website acknowledges that distinction. In the "how much is it worth" section, it specifically notes that the dollar amounts above apply to those with no children.
Many parents won't read far enough to see that lower section. They'll stop with the eligibility sections and conclude that they won't get anything.
As sad as it is, this situation is a good reminder for those doing tax planning that the information that the IRS provides isn't always perfect. For families with higher incomes, reading past the misleading information the IRS put in its eligibility guidelines could well mean hundreds or even thousands of extra dollars in their pockets.