What to expect in the Second Stimulus Check?

by Mounica Kota | Jun 25, 2020 | COVID - 19, HEROS act, Second Stimulus Check, Stimulus check

What to expect in the Second Stimulus Check?

The US Legislation has passed a relief package of $3 trillion known as the HEROES Act n 16th May 2020. By now, most of the Americans have received their stimulus check associated with the CARES Act and there has been a declaration of an official recession. The rate of unemployment across the country has increased exponentially making it quite necessary for another round of Stimulus payment.

The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would help the American households in obtaining another round of Stimulus payments. The Heroes Act would be offering larger stimulus payment to the Americans than that offered by the CARES Act. This bill is currently with the Senate House and has been passed successfully by the Democrat-controlled House.

The need for the Second Stimulus Check

The need for the second Stimulus check by the Americans is quite justified as the pandemic COVID-19 has caused huge losses to the health and the economy of the Americans. Millions of Americans have lost their jobs and there are speculations for further loss of millions of jobs in the US. However, some reports have stated the information about the steady lowering in the unemployment rate in the US. The unemployment rate in the US has dropped by 1.4% from April and there have been around 2.5 million jobs added back since March. This can be considered as a major reason for the Senate to reject this bill of the Second Stimulus Check.

Eligibility to obtain the Second Stimulus Check

If a taxpayer was eligible for obtaining the first Stimulus check then he would be eligible for obtaining the Second Stimulus check. According to the most recent tax returns filed by a taxpayer, people who earn less than $75,000 would be obtaining $1200 whereas married couples can earn $2400 as Stimulus payment.

The age restriction for qualifying as a dependent was set as below 17 years by the CARES Act whereas the HEROES Act has removed this qualifying criterion. Moreover, those taxpayers who have an earning up to $100,000 in a year would receive a prorated amount as Stimulus payment.

Money to be obtained with the second stimulus check

Every member of a household would be receiving $1200 inclusive of the children as well. Those taxpayers who are filing their tax returns with the single status and have an earning less than $75,000 would receive the entire payment. This income threshold is $150,000 for those taxpayers who are married and are filing their tax returns jointly.
Under the Heroes Act, the total payment for one family would be capped at $6,000.

Provisions for Older students under the HEROES Act

Under the CARES Act, dependents whose age was below 17 years would be eligible for the receipt of the $500 payment. This excluded many high school students, seniors, and many other college students who were already claimed as dependents on their parent’s tax returns from obtaining the Stimulus Check.
However, the HEROES Act ensures that all dependents who might be college going students or teenagers would receive the Stimulus Check of $1200.

Provisions for Immigrants to obtain the second Stimulus Check

The CARES Act needed an American to have a Social Security Number as a mandate for obtaining the Stimulus payment. However, the HEROES Act needs a taxpayer to only have the Taxpayer Identification Number (TIN) to obtain the Stimulus check.

The Taxpayer Identification Number is used by the immigrants to pay their taxes and thus, it is feasible for the immigrant taxpayers to obtain the Second Stimulus check.

By when would the Second Stimulus Check be received?

It is quite uncertain as to by when the Senate would be considering the Second Stimulus Check payments. However, it has been estimated that the Stimulus Checks would reach the Americans early this time as compared to that of the CARES Act. Millions of Americans have verified their information on the “Get My Payment” site of the IRS and this would make the payments faster this time. According to experts, if the bill takes another two weeks for approval then the Americans would be seeing their payment for the Second Stimulus Package by the end of July or early of August.

Hence, with the impact of the pandemic intensifying daily this initiative by the US Government would be of real help to the Americans in overcoming the economic crisis caused by the pandemic COVID-19.

References

https://www.cnet.com/personal-finance/second-stimulus-check-how-much-you-could-get-when-could-payments-come-latest-news/ https://www.cnet.com/personal-finance/second-stimulus-check-how-much-you-could-get-when-could-payments-come-latest-news/

https://www.cbsnews.com/news/second-stimulus-check-how-much-when-heroes-act/

https://www.tomsguide.com/news/stimulus-check-2-update-senate-vote-date-eligibility-and-latest-status

https://www.forbes.com/sites/terinaallen/2020/05/11/the-2000-second-stimulus-check-what-americans-say-about-it/#4e78ee53514f

How to track the status of your tax refunds amidst pandemic?

by Mounica Kota | Jun 22, 2020 | Amended Tax Return, COVID - 19, Tax Payers, Where's My Refund

How to track the status of your tax refunds amidst pandemic?

The pandemic COVID-19 has adversely affected the lives and livelihoods of millions of Americans. With huge unemployment and economic crisis throughout the country, many Americans are looking forward to their Federal Tax refunds as a source of obtaining some money. The inquisitiveness among the taxpayers about “Where is my tax refund” is quite natural in such distressful times.

In general, the tax refund processing time is different for the different methods by which the tax refund has been filed.

For those taxpayers who have filed their tax returns electronically with direct deposit, the tax returns are processed within 21 days of acceptance of the e-filing by the IRS.
For those taxpayers who have filed their tax returns through paper, can expect their tax returns to be processed within 6weeks to 8 weeks of receipt of the return by the IRS.

How can the status of tax return be checked?

The IRS tool “Where’s My Refund?” can be used by taxpayers to access the status of their tax returns. To login into this IRS tool, there would be the need for three major pieces of information

Social Security Number or Taxpayer Identification Number
Filing Status of the taxpayer
The exact refund amount which the taxpayer would obtain

Moreover, taxpayers can access their tax return status from their mobile phones by using the app IRS2Go. This app can be downloaded for free on Google Play, Amazon, etc. and can be used to check tax refund status, make a tax payment, or obtain any free tax assistance if needed.

When can taxpayers start checking their refund status?

Taxpayers can start checking the status of their tax returns within 24 hours after their tax return which has been filed electronically is received by the IRS.

In case the taxpayer had filed tax returns by paper medium, then his status would take around 4 weeks to reflect in the IRS system. So, the taxpayer should wait for 4 weeks before checking the status of his tax refund.

Information available on “Where’s My Refund” tool

On the IRS tool “Where’s My Refund”, once the details are entered by the taxpayer, the screen would show up any of these three statuses.

a. Return Received

This would mean that the tax return has been received by the IRS and is being processed. The taxpayer needs to wait for at least 21 days within which he would be receiving his tax returns.

b.Return Approved

When the tax return status says “Return Approved” it means that the return request has been processed by the IRS and has been approved as well. This status is usually seen after three weeks of the “Return Received” status.

The taxpayers can even see an estimated date by which their refund money would be deposited into their specified bank account. There can be instances in which the taxpayers do not receive their money on the estimated date; the IRS suggests the taxpayers facing such issues to first contact their bank to ensure that there are no problems associated with the account.

c.Refund Sent

When the status says “Refund sent” it means that the IRS has sent your tax refund to your bank account by direct deposit or has sent your check via mail. The date on which the return payment was sent must be mentioned in this tool.

The taxpayers should keep in mind that even if the refund has been sent by the IRS, your bank would take at least 1-5 business days to deposit the money into your account. Also, if the return has been filed by paper means then the check would reach the taxpayer within several weeks via mail.

In case, the taxpayer owed some money to the IRS because of tax due, Federal Student Loan, or any other cause; then that amount would be reduced from the refund by the IRS. The IRS would inform you about any such deductions made from your refund on this webpage.

Status of Amended Tax Return

In case, amended returns have been filed by a taxpayer they would take up to around three weeks to reflect in the IRS system. Moreover, it would take 16 weeks or more for the processing of Amended tax returns.

Taxpayers can easily track the status of their Amended Tax return by the tool “Where’s My Amended Return” tool. There are three statuses which can be seen for Amended Tax Return in this tool i.e.

Received – This means the taxpayer’s amended tax return has been received and is being processed.
Adjusted – The status Adjusted means the IRS made adjustments into the account of the taxpayer.
Completed – This means the tax refund has been processed by the IRS and all necessary information related to this has been mailed to the taxpayer.

References

Top #5 things to note about the extended Tax deadline July 15-2020 from April 15-2020 which is just round the corner

by Mounica Kota | Jun 20, 2020 | Federal Tax Payment, tax deadline, Tax Extension

Top #5 things to note about the extended Tax deadline July 15-2020 from April 15-2020 which is just round the corner

Millions and millions of Americans have been affected by the deadly coronavirus whose impact is worsening further day-by-day. Americans are facing health problems, losing their sources of income and are facing a very difficult time. In such bad times, the Federal Government has been quite supportive and has taken up various initiatives by which the economic stress of the Americans would be reduced.

One of the major initiatives taken by the Federal Government to reduce the economic burden on the Americans affected by the pandemic COVID-19 is the extension of the tax return filing and the tax payment deadline to 15th July 2020 by the IRS. This extension in tax filing deadline is applicable for all taxpayers i.e. both residents and non-residents and including individuals, corporations, estates, trusts, and other non-corporate tax filers as well.

Let us know about the major five things about this tax deadline extension provided by the Federal Government.

a.Extension for filing tax return and tax payment

This extension offered by the IRS is applicable both for filing Federal tax return and Federal tax payment. Originally, the Federal Government was about to give the deadline until 15th July 2020 to pay the taxes along with penalties and interest. However, the rules have been modified due to the economic stress caused due to the pandemic COVID-19. But, those taxpayers who are expecting their tax returns must file them soon to obtain the refunds faster.

b.Eligibility for availing the extended deadline

According to the IRS, there are is no such eligibility criteria for a taxpayer to avail the extended deadline. Any person who has a pending Federal Income Tax payment or returns due for 15th April 2020 can avail of the relief of deadline extension. This extended timeline is also applicable for the estimated Federal Tax Income payment 2020. This timeline extension is only applicable for those payments or return filing due on 15th April 2020 and not due on any other date.

c.State tax laws

There are a large number of states who have also extended their timeline for Federal income tax return filing and payment dates to 15th July 2020 as that of the Federal Government. States such as Alabama, Arizona, Kansas, Ohio, South Carolina, District of Columbia, West Virginia, Michigan, New Jersey, Montana, Oklahoma, Minnesota, Kentucky, Wisconsin, Maine, Georgia, Illinois, California, Colorado, and many more have their tax return filing and payment extended up to 15th July 2020.

However, there are some states like Hawaii, Idaho, Iowa, and Virginia which have extended their timelines differently than that of the Federal Government. The timeline in Hawaii has been extended to 20th July, in Idaho has been extended up to 15th June 2020, in Virginia had been extended up to 1st June 2020 and up to 31st July 2020 in Iowa.

d.Inability to pay by 15th July 2020

In case a taxpayer feels that he would not be able to pay his Federal Income tax even by the extended timeline i.e. 15th July 2020, then he would have to file for an automatic extension. The taxpayer must request for the automatic extension of the timeline by 15th July 2020. He can be able to request for the extension automatically by e-filing using Form-4868. Moreover, if business entities or trusts would be interested in filing for an extension, then it can be done electronically through the Form-7004.

e.IRA and HSA

Since the deadline for filing tax returns and tax payment has been extended till 15th July 2020; the taxpayers can make contributions to their IRA and HSA up to 15th July 2020.

Additional Information

However, there are some other items whose deadlines have been extended until 15th July 2020.

The Estimated Federal Tax payment for the second quarter has also been extended till 15th July 2020 which was 15th June 2020 earlier. So, by this, the taxpayers would have to now submit both the Estimated Federal Tax payments for both the 1st quarter and the 2nd quarter by 15th July 2020.
The partnership return filings and the corporate return filings have been extended till 15th July 2020.

Hence, the extended timeline for making the Federal tax payment, filing the Federal tax returns, and even payment of State Tax is almost round the corner and taxpayers should be prepared for it from now.

References

The non-filer NRIs in the US and the Economic Impact Payment co-relation

by Mounica Kota | Jun 18, 2020 | Adjusted Gross Income, Economic Impact Payment, EIP Correlation, Non Filer EIP

The non-filer NRIs in the US and the

Economic Impact Payment co-relation

The US Government has passed the CARES Act under which the US citizens and the US resident aliens would be receiving Economic Impact Payments (EIP). This is an initiative by the Federal Government to provide aid and alleviate the economic stress caused to the Americans due to the pandemic COVID-19. The IRS would be calculating and sending the Economic Impact Payments (EIP) to the eligible Americans. Currently, millions of Americans have already received their EIP and many more EIPs are being processed by the IRS.

Eligibility for the receipt of Economic Impact Payment (EIP)

The US citizens, permanent residents, and qualifying resident aliens can receive the EIP if

They have a valid Social Security Number
They have not been claimed as a dependent of any other taxpayer
They have Adjusted Gross Income (AGI) under certain limits.

The US citizens and the US resident aliens would receive $1200 or $2400 as EIP depending upon certain criteria. The threshold for Adjusted Gross Income (AGI) of the Americans to receive the EIP is noted below.

Adjusted Gross Income (AGI) up to $75,000 for those filing tax returns as Single
Adjusted Gross Income (AGI) up to $150,000 for those who are married couples and are filing their tax returns jointly.
Adjusted Gross Income (AGI) up to $112,500 for the head of household filers.

For those eligible taxpayers who have filed the tax returns for 2018 or 2019, the EIP would be received automatically. Moreover, those eligible retirees who do not file a tax return but are recipients of SSR (Social Security Retirement), Railroad Retirement benefits, Supplemental Security Income, VA Compensation, and Pension, etc. would obtain their EIP automatically.

Non-filer NRIs and their EIP

However, some NRIs or resident aliens might be having low income or not filing tax returns. These non-filer NRIs are also eligible for obtaining their EIP but they will have to enter their information with the help of the IRS webpage.

The IRS webpage consists of a tool “Non-Filers: Enter Payment Info Here” by which the non-filer NRIs can enter their payment information. This information can be used by the IRS to issue the EIP for the Non-filer NRIs.

An NRI would not be required to file a federal income tax return for the year 2019 due to any of the below-mentioned reasons.

If the income of the NRI is less than $12,200 then there would be no necessity to file the Federal Income tax return for the year 2019.
In case the NRI is married, filing his Federal tax returns jointly with his spouse and has an income less than $24,400 then he would not be filing the Federal Income Tax Return for 2019.
If the NRI has no income, then he would not file the Federal Income Tax Return.

Information needed to be provided by the NRI

The non-filer NRI needs to provide some important information in the “Non-Filers: Enter Payment Info Here” tool to obtain his EIP.

Full Name of the NRI, his email address, and present mailing address.
NRI’s date of birth and Social Security Number (SSN).
Bank Account Number of the NRI
Driver’s license or any ID issued by the State Government.
IP PIN (Identity Protection Personal Identification Number) provided by the IRS in the previous year. In case an NRI has lost the IP PIN, then he must log in to another IRS tool i.e. “Get an IP PIN” for obtaining a new IP PIN.
For every qualifying child in the year of 2019, the NRI has to share details such as Name of the child, child’s Social Security Number, Adoption TIN, and his relationship with the NRI or with his spouse.

Procedure to use “Non-Filers: Enter Payment Info Here” tool

An account must be created by the use of an email address and phone number. By this, the NRI would obtain a user ID and password.
In the next step, information related to the filing status such as “Single” or “Married filing jointly” need to be filled up along with other personal information.
A box asking whether the NRI or his spouse can be claimed as a dependent by someone must be checked.
Further, bank information needs to be entered followed by another screen where the NRI can enter his personal information to verify himself.

With this, the procedure to complete the Non-Filers information is completed and an acknowledgment would be received by the NRI regarding the completion of the procedure. The Free Fillable Forms, a trustworthy partner of the IRS would use this information and complete Form 1040, compute the EIP, and send it to the recipient.

References

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

https://www.irs.gov/newsroom/non-filers-enter-payment-info-here-tool-scenarios

https://www.irs.gov/coronavirus/economic-impact-payment-information-center#:~:text=U.S.%20citizens%20and%20U.S.%20resident,married%20couples%20filing%20joint%20returns

How to leverage your income tax refunds amidst the COVID-19 pandemic?

by Mounica Kota | Jun 15, 2020 | 401(k), COVID - 19, Income Tax refunds, Roth IRA

How to leverage your income tax refunds amidst the

COVID-19 pandemic?

Currently, the entire world is facing the dreadful consequences of coronavirus. Millions and millions of people have been impacted and the global economy has come to a standstill. In the US, the impact of the pandemic COVID-19 is intensifying each day. Millions of Americans have become unemployed and the economy of the country is regressing.

In such difficult times when the livelihood of the common people has been impacted in such a worse manner, Americans see a dint of hope in the Income-tax refunds which they would obtain. Even though the Federal Government has provided Stimulus Checks, additional money is always helpful in such bad times.

If you have filed your Income Tax Returns and are waiting to receive a hefty amount from the IRS, then you should also think about avenues by which you can leverage your refunds during these critical times.

Let us have a look at some of the best options to leverage your income tax refunds during this pandemic COVID-19.

a.Emergency Savings Account

You should open a savings account and try to put a major part of your Income tax refund into that account as an Emergency Savings Account. This would be helpful in case emergencies are arising due to the pandemic such as a medical emergency or you lose your job, unfortunately. This Emergency Savings Account will be your savior in difficult times.

b.Increase your contribution into your 401(k)plan

You can utilize this opportunity to increase your contribution to your 401(k) plan. In case, you have been contributing only 3% of your paycheck but your employer matches up to 6% then you can double the pre-tax income which you are investing in your retirement funds. It can lead to your monthly paycheck being a little low but you will be investing for good and your taxable income would also be low.

c.Investment into Stocks

When you have already made your contributions to your retirement account, then you must invest your income tax refunds into purchasing stocks or mutual funds. Generally, the stock market would deliver better returns than that of a Savings Account and Treasury bonds. But, sometimes there are risks involved in the stock market and the returns are not guaranteed. Investment in stocks by tax refunds is a good idea if you are saving to attain long-term goals.

d.Paying down the existing debts

When you obtain your Income Tax returns, it is wiser to pay off your debts quickly. The high-interest debts must be paid off on priority as this would help you in saving a lot of money in the future. Usually,debts are associated with credit card dues and if you are fortunate enough to not have credit card dues then you should pay off your car loan or student loan.

e.Contribute to Regular or Roth IRA

If you are thinking about your long term savings, you must contribute your income tax refund into Regular or Roth IRA. If you and your spouse have a modified AGI of less than $203,000 then you can be able to contribute up to $6000 to Roth IRA in 2019 or $6500 if you are 50 years or above.

f.Contribute to HSA

You can open HSA if you do not have one as HSAs are a very good option to keep aside some money for medical expenses i.e. may be routine or emergency medical expenses. Your unused funds in the HSA keep on rolling to the consecutive years and the remaining money can be utilized during retirement once you are above 65 years of age.

g.Investment into an ETF

You can invest your income tax refunds in broadly diversified ETFs which are a safe investment option. ETFs would include thousands of stocks, low volatility, and any risk compared to individual stocks. Investing in ETFs would be good as they are passive and have a low expense ratio.

h.Make donations

This is a philanthropic option and perhaps one of the best ways to utilize your money obtained by a tax refund. You can make your donations into mainly those charitable organizations which support a good cause and are working towards a cause that you support.

In addition to all these available tax refund investment options, you must some a considerable amount of cash in your hand during these emergency times. Moreover, you can invest some of your money in self-care avenues like taking up any online courses/training or workshop. This would be helpful in your career in the future and would return you an incremented paycheck