ask the taxgirl


Taxpayer asks:


My stepdaughter received her $1,200 payment from the Federal government, however, she has not received anything for her minor child, who was included on both her 2018 and 2019 tax returns.

Have you heard of anything regarding parents receiving separate or delayed payments for their children?

Taxgirl says:

Yes. This has been a consistent gripe from parents. The Internal Revenue Service (IRS) has offered some explanations for non-filers (you can read about them here). Since those didn’t apply to all filers, the IRS again tackled this subject, offering some reasons why your payment might be less than expected (you can read about them here).

But for many of my readers, those explanations haven’t helped: the $500 stimulus payment for dependents appears to have simply been overlooked.

In that case, the IRS offers: 

If you did not receive the full amount to which you believe you are entitled, you will be able to claim the additional amount when you file your 2020 tax return.  This is particularly important for individuals who may be entitled to the additional $500 per qualifying child payments.

So, something of an answer. For many taxpayers, this is a hardship. As a result, the National Taxpayer Advocate is actively encouraging the IRS to continue to evaluate the possibility of making a separate payment of EIP child benefits to qualifying individuals this year. But so far, that’s not the case.

I’ll update if I hear more.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Taxpayer asks:

If I am on SSDI but I owe child support, will I still receive a stimulus check?

Taxgirl says:

Typically, certain Social Security benefits, including SSDI or SSI, are exempt from garnishment from most creditors. There are a few exceptions, and one of them is – you guessed it – the federal government. 

If you are collecting SSDI or Social Security retirement benefits, the federal government can garnish your benefits to recover back taxes or defaulted federal student loan payments. Your SSDI and Social Security retirement benefits can also be garnished for child support. Limits apply in those cases.

Here’s where it gets tricky. The CARES Act specifically says that Economic Impact Payments (EIPs or stimulus checks) can only be used as an offset for child support, and not for other obligations like back taxes or student loans. (You can read more about child support garnishes here.)

So, if you receive SSDI or Social Security retirement benefits, but you owe child support, the IRS may offset your check. That’s pretty clear.

Here’s where it’s less clear. If you receive SSI benefits, your SSI payment typically cannot be seized to satisfy existing obligations – including child support. However, your stimulus check is not considered an SSI benefit: it is a refundable tax credit. That means it should not fall under the exception. So while the IRS has not made an official comment on this issue, I believe the IRS will offset stimulus checks to SSI benefit recipients for child support. Readers have reported that to be the case, and that’s the logical conclusion – but this program, to date, hasn’t been very logical.

It’s worth noting that once the EIP payment has hit your bank account, it is no longer protected, and can be seized by creditors.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

(Updated: April 20, 2020)

Last month, I wrote a primer on stimulus checks, and I’ve been updating it as I field your questions: thanks for asking!

I thought it might be helpful to tackle some of the most commonly asked questions in a separate article. Here’s what you’ve been asking – along with my answers – regarding those tax stimulus checks.

How big will my check be? Checks will be $1,200 per adult – or $2,400 for married couples filing jointly – and an additional $500 per child.

But I didn’t work last year – or I am a senior on a reduced income – I thought I was left out? Or that I got a smaller amount, like $600? No. One of the original Senate proposals did include language that would limit checks for low-income Americans to earned income or $600. This is no longer the case. There is no minimum income needed to qualify for a check.

But if I don’t normally file taxes, how do I get a check? You may need to register with the IRS to get your check using the Non-Filer Tool on the IRS website.

Are there income limits on checks? The amount of the checks would start to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household) and are subject to phaseouts (more on those here). This is adjusted gross income (AGI), not taxable income – so before your standard or itemized deductions. You’ll see your number on line 8(b) of your form 1040:

As a senior citizen, my only source of income is Social Security benefits, so I haven’t filed taxes for 2018 or 2019. I read that to receive the stimulus money, I must file 2019 taxes. Is that true? The short answer is no, you don’t have to file a return.

What about SSDI benefits? According to the IRS, Social Security Disability Insurance (SSDI) recipients don’t need to take additional action: your check will be direct deposited (or you’ll get a paper check) just as you’d normally get your benefits.

What about SSI or VA benefits? A group of 45 Senators reached out to request that Treasury provide stimulus payments automatically to recipients of benefits through the Veterans Administration or the Supplemental Security Income program, without requiring them to file a tax return. That is now the case.

What about Social Security, Railroad retirees, and SSDI beneficiaries who have qualifying children? You can take an additional step to receive $500 per qualifying child.

You wrote that I couldn’t get a check for my child who is in college because of his age, even though I claimed him as a dependent. He works. Can he get his own check? Not if your child is a dependent (you can read more here). There is a suggested fix in the works to change this, but I don’t know if it’s going to happen in time.

My mom is a senior citizen, and I claim her as a dependent. Can I get a check for her? Unfortunately, no. For purposes of getting the extra $500, the bill uses the same definition as you’d use for the child tax credit. The sticking point for most is age: the child must be under age 17 at the end of the tax year. That means you do not get $500 for a child above the age of 16, even if they live with you and eat your food and spend your money and sleep in your house. The same is true for adults.

Okay, if I can’t get the $500 for my mom since I claim her as a dependent, can she get a check? Not if she is a dependent.

I made more money in 2019 than in 2018. Can I wait to file my 2019 return? Of course! Remember that filing and payment dates have been automatically extended for federal income tax returns to July 15, 2020.

I’ve already filed my 2018 and my 2019 tax returns. Is there an office I can contact to make an appeal to have the decision made on my 2018 return and not 2019 return? I’d be shocked if you could reach anyone at IRS right now, and there’s no mechanism for an appeal so far as I know – and an appeal would be contrary to the language in the Act. Since the credit is technically based on your 2020 return (which hasn’t been filed yet, which is why they are looking at 2019), if you qualify for the 2020 tax year, you can still apply for it in 2021. All is not lost!

I had a kid in 2020. Will I get a check for my child in 2020? Probably not in 2020 since the IRS doesn’t know about your new delivery. But again, since the credit is technically based on your 2020 return, you should be able to adjust to account for the new baby in 2021.

My income is going to be higher in 2020, but I got my check based on my 2019 income, which was lower. Do I have to pay it back? There is no clawback provision in the law, so it should be treated as a math error in your favor if you got too much. You don’t have to pay it back.

Is my check taxable? No. This is not taxable income.

Are you sure it’s not taxable? What about messing up my benefits? Or my FAFSA? Yep, sure it’s not taxable. It won’t boost your income and won’t affect your benefits.

Are you sure that I don’t have to pay it back? I read that somewhere that it’s an advance and I do have to pay it back. Or that it will reduce my refund. You will not have to pay it back. It is an advance, but it’s an advance of a new, temporary credit for 2020. It will not affect your “normal” refund in 2020. The only folks who should see a difference are those who didn’t get the advance this year but were due one – they’ll get more since they’ll get the credit in 2021 (for the 2020 tax year).

When will I get my check? Checks are supposed to be produced “as rapidly as possible.” Checks went out the week of April 12, 2020. If you use direct deposit, you’ll get your money faster.

I’ve read that some checks won’t be available until September. How is that possible? Taxpayers who have direct deposit information on file will receive their checks first. Of course, not all taxpayers have current direct deposit information on file so the IRS plans to develop a web-based portal for those individuals to provide their banking information online – but that portal is not up and running yet. If the IRS mails out paper checks, those take longer to process. You can read more here.

I’ve heard that some people got their checks weeks ago. Is that true? Not unless they can time travel.

Can I get my check faster if I pay for it? No, that’s a scam. You can find out more about scams and hoaxes related to stimulus checks here.

Will I still get the check if I owe the IRS some money? Yes. If your refund would normally be seized to pay a tax debt, that shouldn’t happen here. The law says no offsets for existing federal tax debts.

What about if I am on an installment plan? Same result: the law says no offsets for existing federal tax debts.

What if my check is usually seized for child support? The law says that checks won’t be levied or offset, but there is an exception for child support. Under the law, your check can be seized or taken for if you owe back child support.

I’ve seen so many versions circulating on the internet. Where can I find the actual text of the law? Here’s the link. And here’s a tip: When verifying a law, rule or similar, look for government sources, including official websites.

What does the IRS have to say about all of this? The IRS has confirmed some of this information and will eventually post more information on its website.

Can I call them and ask? The IRS asks that you not call.

What about you? Please don’t call me either (my kids would likely be in the background asking to be fed again). But I’m happy to answer your questions: here’s how to ask.

Taxpayer asks:

Just read your article on Forbes “Working From Home? Your Home Offices Expenses Are Probably Not Tax-Deductible.

Now, it is as my understanding that an employee could still deduct home office if they are REQUIRED by their employer to work from home. My employer shut the doors early in March and required all of us (small business, less than 50 employees) to work from home only, no choice (many of us had to buy a laptop or monitors as well in order to maintain our normal productivity). This may last for as long as four months, maybe more according to my employer. Shouldn’t everyone at my company qualify for the home office and equipment deduction (assuming we meet the other exclusive space requirements)?

Taxgirl says:

I hate to be the bearer of bad news, but unfortunately, that was the old rule.

The Tax Cuts and Jobs Act (TJCA) eliminated the home office deduction altogether for employees from 2018 to 2025. You can confirm this with IRS Publication 587 which states:

Employee expenses for business use of the home no longer allowed. You can no longer claim any miscellaneous itemized deductions on Schedule A, including expenses for using your home as an employee. Miscellaneous itemized deductions are those deductions that would have been subject to the 2% of adjusted gross income limitation.

Now, home office expenses can only be deducted on Schedule C for independent contractors, freelancers, and small business owners (or Schedule F if you farm).

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Taxpayer asks:

Any idea whether the filing extension applies to gift tax returns?

Taxgirl says:

AUTHOR’S NOTE: There is (finally) official word from the Internal Revenue Service (IRS) on this issue: Normal filing and payment due dates continue to apply to estate and gift taxes.

That said, my original reply remains below:

Honestly, I don’t know. My gut is no, and here’s why.

The Internal Revenue Service (IRS) has announced that the tax filing season been pushed to July 15, 2020. The IRS also issued guidance making clear that the due date for filing tax returns and making tax payments has been extended from April 15 to July 15. You can read the guidance here (downloads as a PDF).

The relief applies to federal income tax payments and federal income tax returns. According to the guidance, the relief doesn’t apply to any other taxes. In other words, there’s no automatic extension for any other type of federal tax or for the filing of any federal information return. I would interpret that to mean that gift tax returns are not covered by the relief but there is no specific guidance on this out yet.

Someone pointed out extensions language in the instructions (downloads as a PDF). It’s not terribly clear. the instructions say about the due date, “Generally, you must file Form 709 no earlier than January 1, but not later than April 15, of the year after the gift was made.” That’s not tied to the income tax return.

However, the instructions say that if you’re granted an extension of time for filing your calendar year 2019 federal income tax return, that will also automatically extend the time to file your 2019 federal gift tax return. It also says, “income tax extensions are made by using Form 4868, Application for Automatic Extension of
Time To File U.S. Individual Income Tax Return, or Form 2350, Application for Extension of Time To File U.S. Income Tax Return. You may only use these forms to extend the time for filing your gift tax return if you are also requesting an extension of time to file your income tax return.”

I don’t love the ambiguity. If this were me, I’d likely err on the side of caution by filing a Form 8892 (downloads as a PDF).

What is clear from the instructions (and Regs) is that any extension of time to pay the gift or GST taxes, you must be separately requested.

If I find out differently, I’ll let you know.

Taxpayer asks:

What if I already filed my 1040 and scheduled an EFTPS automatic payment on April 15? Is there a way to cancel that automatic payment and take advantage of the deferral to July 15?

Taxgirl says:

To be honest, I didn’t know the answer to this one, so I had to do a little bit of legwork.

First, the backstory. The Internal Revenue Service (IRS) pushed the filing deadline to July 15, 2020. The IRS also issued guidance about payment relief – waiving penalty and interest on payments previously due on April 15, 2020. That means that tax payments aren’t due until July 15, 2020.

Some taxpayers schedule payments in advance through Electronic Federal Tax Payment System (EFTPS). EFTPS is a free service from the U.S. Department of the Treasury. All federal taxes can be paid using EFTPS. You can make payments via the web, a voice response system, or special channels designed for tax professionals, payroll services, and financial institutions. You can schedule business and individual payments up to 365 days in advance.

(For more payment options, click here.)

So what happens if you’ve already scheduled payments through EFTPS? I called up EFTPS to find out. Those numbers are:

  • To reach an EFTPS® customer service agent: 1.800.555.4477 (en español, 1.800.244.4829)
  • TDD (hearing impaired): 1.800.733.4829 (8 a.m.-8 p.m. ET M-F)
  • If you’re outside the United States, call EFTPS® at 1.303.967.5916 (toll call).

They are available by phone or online 24 hours a day, 7 days a week. (You can find more numbers here.)

According to an EFTPS rep, to cancel a previously scheduled payment, you need to call them and have the following information:

  • Your name and Tax ID number;
  • The exact amount of the payment; and
  • The date of the payment.

EFTPS can cancel – and reschedule – the payment with that information.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Taxpayer asks:

Is the 1st 2020 quarterly still due on April 15? This means selling securities in a down market to cover that. What’s official? What’s your take?

Taxgirl says:

No, estimated payments are no longer due on April 15, 2020.

As COVID-19 continues to impact the United States, the federal government is taking action to ease the burden on taxpayers. Most recently, the Internal Revenue Service (IRS) has issued guidance about payment relief – waiving penalty and interest on payments previously due on April 15, 2020. The guidance made clear that relief includes estimated tax payments for the tax year 2020 that are due on April 15, 2020. You can read more FAQs about payment relief in this piece.

It’s worth noting that the current Senate proposal would push all estimated tax payments to October 15, 2020. That is not yet law but it is being considered. You can find out more about the Senate bill here.

Finally, in case you didn’t see it, the filing deadline has (finally!) been pushed to July 15, 2020.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Taxpayer asks:

Ma’am I’m new to the Tax issue so if this has been asked I apologize. I’m a union Ironworker, I’ll be filing single and have made $41,000 will my tools (welding hoods etc.) still be a deduction and will my union dues be a deduction as well?

Thank you for your time.

Taxgirl says:

Unfortunately, no.

It’s confusing because in prior years, union dues and expenses were deductible on Schedule A. They, along with other miscellaneous job-related expenses like tools, were deductible to the extent that they exceeded 2% of your adjusted gross income (AGI).

Under the Tax Cuts and Jobs Act (TCJA), unreimbursed job expenses and miscellaneous deductions subject to the 2% floor have been eliminated for the tax years 2018 through 2025. Those expenses include those that you incur in your job for which you are not reimbursed, like tools and supplies; required uniforms not suitable for ordinary wear; dues and subscriptions; and job search expenses. They also include unreimbursed travel and mileage, as well as the home office deduction.

The TCJA did not change the deduction rules for self-employed persons. If you are self-employed, you can continue to deduct qualifying expenses on Schedule C, Profit or Loss From Your Business on your 1040.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Taxpayer asks:

Since 2002, I have owned (via a single-member LLC) an office complex in upstate new york. I purchased it as an investment to either sell or rent. Unfortunately, this property has been vacant and producing no income as a result of town opposition to the use of the property for office purposes. Similarly, the market value was destroyed by the Town. 

My property taxes paid 2018 are approx 20,000.00. My CPA says that his CCH program does not allow for the full deduction and that it defaults to the 10,000 SALT limit.

I am wondering if you have any experience with the applicability of the SALT deduction to a vacant rental or investment property. Any help would be appreciated. Thanks,

Taxgirl says:

The $10,000 SALT limits cap the aggregate of individual state and local taxes, including real estate taxes. But some taxes don’t apply – those are spelled out at section 164 of the Tax Code which says:

The preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212. (emphasis added)

In other words, the cap doesn’t apply to state and local taxes that are paid or accrued in carrying on a trade or a business or an activity described in section 212. Section 212 says:

In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year:

 (1) for the production or collection of income;

 (2) for the management, conservation, or maintenance of property held for the production of income; or

 (3) in connection with the determination, collection, or refund of any tax.

So that rental real estate you have? You’re using it to produce income, right? Then it should not be subject to the cap. The cap is intended to apply to those state and local taxes claimed on a Schedule A.

I don’t know whether your CPA is getting hung up on the vacancy bit. The timing could be an issue. You didn’t say how long the property has not been producing income, but the IRS likes to see businesses making money. A good rule of thumb is that you should be showing a profit three of five years. If you have not made money for years, it may be that your CPA is treating the investment as a hobby or personal asset instead of as a business. I’d ask him to explain his thinking, and if you’re not satisfied with the answer, seek a second opinion.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.