First, it depends on your filing status: if you’re single, the payment is $1,200, but it doubles for a married couple filing jointly to $2,400. It also depends on your family size; you’ll get an additional $500 for every child under the age of 17. If you are claimed as a dependent on someone else’s tax return, you are not entitled to any payment at all.
For high-income taxpayers, it depends on just how high your income goes; a married couple will start to lose the payment once adjusted gross income (AGI) exceeds $150,000, and the same will occur for a single taxpayer once AGI exceeds $75,000.
Your payment also depends on whether or not you have filed your 2019 tax return.
According to the new law, the IRS is going to look first to your 2019 tax return to compute the payment. If no 2019 return has been filed, however, the IRS will grab your 2018 return instead. (If you receive Social Security and don’t need to file a return, the IRS will send you a payment based on your Form 1099-SSA).
An individual who has not yet prepared his or her 2019 return should take into account the relevant variables — adjusted gross income, marital status, number of children — and determine which year would yield the bigger payment. If it’s 2019, then you’d better hurry up and file; if it’s 2018, then delay filing 2019 return back until you receive your payment.
Example 1. In 2018, A and B are married but have no children. Adjusted gross income for the couple is $200,000. In 2019, however, A and B have a child, and B takes a leave from work. As a result, income has dropped to $120,000.
They would receive no stimulus payment based on their 2018 return because their income exceeds the phase-out limit. Based on their 2019 return, however, they are entitled to a payment of $2,900 ($2,400 + $500) But they have to file 2019 before the check is issued.
Example 2. C can be claimed as a dependent on his parents’ return for 2018. In 2019, he graduates college and gets a job, and is can no longer claimed as a dependent.
C’s is not entitled to any payment based on 2018 because he can be claimed as a dependent. He’s entitled to a stimulus payment of $1,200 based on 2019. Again a 2019 return must be filed before the refund is issued
Example 3. D, Single hasn’t filed a 2018 or 2019 return because he had no income. He should file a 2019 return even with no income, in order to generate a $1,200 stimulus payment.
In other scenarios, it will behoove you to delay filing your 2019 return until AFTER you’ve received the stimulus payment, a task made easier once the IRS delayed the April 15th filing deadline to July 15, 2020.
Example 4. In 2018, A and B have a 16-year old daughter and income of $120,000. In 2019, they have the same income, and their daughter has turned 17.
Because their daughter has turned 17 in 2019 they should delay filing their 2019 return until they receive their payment.
The stimulus payment is intended to be an advance payment against an actual credit you will compute on your 2020 tax return. If your advance payment is LESS than what you’re owed when you compute your 2020 return, you’ll get the excess as a credit on that return. But if your advance credit is GREATER than what you’re actually owed come the filing of your 2020 return, there appears to be no mechanism to either 1) repay the excess payment, or 2) recognize the excess amount as income.
