What to know about taxes and stimulus checks


Some seniors are confused about their status regarding “stimulus checks,” the government payments designed to help people through the difficulties caused by the COVID-19 pandemic. This is not surprising, as there have been a total of three rounds of payments, authorized by two separate acts of Congress. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed early in 2020, and the first round of payments went out in April of that year. A second round of CARES payments was authorized in Dec 2020.
The April payments were set at $1200 for single filers and $2400 for couples filing jointly, while December’s were for one half those amounts ($600 per individual and $1200 per couple).  Income thresholds for both CARES payments were the same: up to $75,000 for single filer and $150,000 for couples filing jointly. Both CARES payments phased out slowly above those thresholds.
In March 2021, a third round of stimulus payments was authorized by the American Rescue Plan Act of 2021 (the COVID-19 Stimulus Package). This third round provided payments of $1,400 for eligible individuals or $2,800 per eligible couples who filed tax returns jointly.  Unlike the first two rounds, this program extended eligibility to adult dependents, a big help to families serving as caregivers to adult loved ones. Eligible dependents, including seniors claimed as dependents, qualify for the $1,400 sum. Again, eligibility is determined by the amount of income reported on past tax returns.
One cause of concern for many seniors has related to the eligibility of non-filers. If Social Security was the primary source of income, or if they had limited income from other sources, seniors were not legally required to file an income tax return (see Should Seniors File a Tax Return Even If It Is Not Required). Would they be qualified to receive any one of the three stimulus payments?  Added confusion occurred because the IRS originally said it would use data from past tax returns to determine eligibility; this caused many to think that if they had not filed tax returns, they would get no payment.
However, the IRS reversed this decision and now uses data from the Form 1099 benefit statement (Form SSA-1099) that is used to report Social Security income on tax returns. These forms are sent out each year, regardless of tax filer or non-filer status.   Most seniors who receive Social Security benefits get them through direct deposit, and the IRS should have made these first two stimulus payments using this direct deposit information. If you did not receive one or both of the CARES stimulus payments, you may need to file a 2020 tax return which includes the “2020 Recovery Rebate Credit.”
Congress took this confusion into account when it passed the COVID-19 Stimulus legislation in March of 2021. This legislation required that seniors will not need to take additional steps to receive the stimulus payment if they receive federal benefits through Social Security. The IRS has already processed and paid millions of these COVID-19 stimulus payments. If you have not received yours, the IRS has a tool to help determine your status. You can use it by clicking Get My Payment. Note that this is an official IRS site and you will need to enter some identifying information: Social Security number, street address, birth date and zip code.
Here are some important takeaways to remember:

  • There have been two stimulus programs, the CARES Act in 2020 and the COVID-19 Stimulus Act (the American Rescue Plan) of 2021.
  • Most seniors are eligible to receive these payments. Exceptions are seniors whose income exceeded the individual or joint income phaseout amounts for tax years 2019 or 2020.
  • Seniors who were claimed as dependents on another taxpayer’s return were not eligible for the CARES payments issued in 2020, but they are eligible for the $1400 payment issued in 2021.
  • If you feel that you were qualified to receive the April and December 2020 payments under CARES, but have missed either or both, you need to file a 2020 tax return which includes the “2020 Recovery Rebate Credit” in order to collect it. This is necessary, even if you have not been required to file in past years.
  • If you have not received the $1400 or $2800 COVID-19 Stimulus payment authorized early this year, the IRS tool at Get My Payment may be able to help.

If you are not aware, the tax deadline for individual filers has been extended to May 17. You can still make an IRA contribution and file refund claims until then.
OurSeniors.net understands that all of this sounds confusing or even intimidating. One of the OurSeniors.net team of experts can help. Bret Porter, E.A. is a full-service accounting firm in South Daytona, FL, providing bookkeeping, incorporating, tax preparation, and payroll services to the greater Volusia County area (Ormond Beach to Edgewater, Deland to Daytona).

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