The IRS will use your 2019 tax return, if you’ve already filed it, or your 2018 return to calculate the amount of your payment. The payments would not be subject to tax, and those who owe back taxes will still get the payouts.
Here’s what we know so far about how it will work:
Direct deposits will go out automatically
That should cover a lot of people. Last year, about 92 million people received refunds via direct deposit. That represents about 82% of people who received refunds and nearly 60% of all tax filers.
“I think it’s reasonable to think those payments can be made in three weeks,” said Nicole Kaeding, an economist with the National Taxpayers Union Foundation.
Who will have to take action?
For those who haven’t filed a return for either 2019 or 2018, the IRS urges them to do so quickly.
Language on tax forms can be unclear, especially for someone who hasn’t filed a return in a while. Usually, the IRS has in-person taxpayer assistance centers located across the country — but they have all been shut down due to the pandemic.
“An area of big concern is how much administrative burden we’re putting on individuals to get these payments. We should be limiting it as much as possible,” said Kyle Pomerleau, a resident fellow at the American Enterprise Institute, where he studies federal tax policy.
Will others get checks in the mail?
How things will work gets a little cloudy for those who have not authorized a direct deposit from the IRS either on their 2018 or 2019 return.
According to the legislation, the IRS has until the end of 2020 to transfer the payments.
An online fix?
But the government has said little about how this would work.
“I think it will be difficult to create that portal in such a time frame but we will see if Treasury can pull it off,” Kaeding said.
It could be helpful for those tax filers who don’t have up-to-date direct deposit or address information on record with the IRS.
Low-income earners could still miss out
An online portal won’t help the millions of people who don’t have access to the internet at home.
It’s likely that the portal will involve an authentication process and that could be a roadblock for some people.
For example, just 30% of people who try to register for an existing online account with the IRS are successful, said former IRS Taxpayer Advocate Nina Olson. The rest fail the authentication test, which requires an account number of a mortgage, loan or credit card, as well as a mobile phone that has the same address on the bill as your return. Not everyone can check all those boxes.
Lowering the authentication standards could invite identity theft, Olson said.
— to www.cnn.com