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The Internal Revenue Service (IRS) and Treasury have announced that they have delivered nearly 130 million Economic Impact Payments (EIPs, or stimulus checks) to Americans. More are on the way. 

I know – and you know – that some Americans may have received a payment amount different than what they expected. The IRS has some explanations for why that might have happened. Here’s a rundown:

  1. You have not filed a 2019 tax return, or the IRS has not finished processing your 2019 return. If you filed a tax return for 2018 or 2019, you generally don’t have to do anything else to collect your payment. Typically, the IRS uses information from the 2019 tax return to calculate the amount of your check. If you haven’t filed for 2019, the IRS will use your 2018 return. It’s possible that you may have filed for 2019, but the IRS has not finished processing your return. In that case, the IRS will also use your 2018 return. Check your status carefully: a message telling you that IRS has accepted your e-filed tax return is different than confirmation of completing processing. And remember, returns filed by paper take longer to process (up to 4-6 weeks in the best times and I think we can all agree that these are not the best of times).
  2. Your family or financial situation has changed. If you’ve gotten married, had a baby, or changed jobs, the IRS may not have a record of those changes. That’s to be expected if those changes occurred in 2020, but even if they happened last year, if the IRS relied on your 2018 return, those changes would not be reflected in your payment (see again #1).
  3. Your dependent didn’t have a Social Security Number. A qualifying child must have a valid Social Security number (SSN) or an Adoption Taxpayer Identification Number (ATIN); a child with an Individual Taxpayer Identification Number (ITIN) is not eligible for an additional payment. Also, any qualifying child must be a U.S. citizen, permanent resident, or other qualifying resident alien.
  4. Your dependent was too old. Don’t confuse dependent with qualifying child: only children who are eligible for the Child Tax Credit qualify for the additional stimulus payment of up to $500 per child. That means that you generally must be related to the child, live with them more than half the year, and provide at least half of their support. Eligible children may include your own children, foster children, younger siblings, grandchildren, nieces, and nephews if they can be claimed as dependents. The child must also be under the age of 17 at the end of the year for the last processed tax return (see again #1). Even though a parent may claim older children – like college students – as dependents, those children do not qualify for the additional $500 payment if they are age 17 or older. It’s also the case that if a taxpayer claimed a parent or any other relative age 17 or older on their tax return, that dependent would not receive a $1,200 payment. However, if a child, parent or other relative cannot be claimed as a dependent on anyone else’s return for 2020, they may be eligible to claim a $1,200 credit on their own 2020 tax return.
  5. Your ex or significant other claimed the child. Unmarried parents who do not file a joint return cannot both claim their qualifying child as a dependent. According to the IRS, the parent who claimed the child on their 2019 return may have received an additional EIP for their qualifying child. When the parent who did not receive an additional payment files their 2020 tax return next year, they may be able to claim up to an additional $500 per-child amount on that return if they qualify to claim the child as their qualifying child for 2020.
  6. Past-due child support was deducted from the payment. The only reason that a stimulus check should be offset is past-due child support. For taxpayers who file jointly and filed an injured spouse claim with their 2019 tax return (or 2018 tax return if they haven’t yet filed a 2019 tax return), half of the total payment will be sent to each spouse. Only the check of the spouse who owes past-due child support should be offset. However, the IRS is aware that a portion of the payment sent to a spouse who filed an injured spouse claim with his or her 2019 tax return (or 2018 tax return if no 2019 tax return has been filed) may have been offset by the injured spouse’s past-due child support. The IRS is working to resolve this issue as quickly as possible. If you filed an injured spouse claim with your return and are impacted by this issue, you do not need to take any action: the injured spouse will receive the unpaid half of the total payment when the issue is resolved.
  7. Garnishments by creditors reduced the payment amount. While there’s no mechanism for offsets other than child support for the EIP, your check is not protected from garnishment by creditors by federal law once the proceeds are deposited into your bank account. It’s possible that your payment could be seized after it has been deposited to resolve other liabilities.

If your payment is smaller-than-expected, and it’s a mistake, you may be able to “fix” it early next year when you file your 2020 federal income tax return. This could include up to an additional $500 for each qualifying child not reflected in your check.

Remember that the checks are technically advances of a new, temporary credit for 2020. Since we haven’t filed for 2020 yet, the IRS will “advance” your check based on your most recently filed tax return (2018 or 2019 tax return, as noted above). However, the amount is NOT taxable and it will not affect your “normal” refund in 2020, nor how much you owe. 

You can find out more about stimulus checks – including answers to some of your most popular questions – here.

The Internal Revenue Service (IRS) has issued some guidance about how to return an Economic Impact Payment (EIP) or stimulus check. That is, assuming that you want to.

To be clear, the payment is NOT taxable. It will NOT negatively affect your 2020 tax return (it won’t decrease your refund or increase how much you owe). And despite some bluster from IRS about returning checks for decedents and incarcerated persons, I don’t know that there is any procedure – to date – that would support the IRS’ position: there is no clawback provision in the CARES Act.

That being said, if you want to return your check, here’s how the IRS says to do it:

  • If the payment was a paper check, write “Void” in the endorsement section on the back of the check. Include a note stating the reason for returning the check and mail “immediately” (yes, the IRS says “immediately”) to the appropriate IRS address listed below.
  • If the payment was a paper check and you have cashed it, or if the payment was a direct deposit, submit a personal check, money order, etc., made payable to “U.S. Treasury” with 2020EIP and the taxpayer identification number (social security number,  or individual taxpayer identification number) of the recipient on the check. Include a brief explanation of the reason for returning the EIP and mail it “immediately” (yep, again) to the appropriate IRS address listed below.

Here are the addresses:

stimulus check addresses

If you still have questions about your stimulus payment, check with your tax or legal professional.

Hear that? It’s the sounds of the Internal Revenue Service (IRS) trying to retroactively impose rules on stimulus checks being paid out under the CARES Act.

The latest target? Incarcerated persons.

On May 6, 2020, the IRS posted the following FAQ on its website:

Q12. Does someone who is incarcerated qualify for the Payment? (added May 6, 2020)

A12. No. A Payment made to someone who is incarcerated should be returned to the IRS by following the instructions about repayments. A person is incarcerated if he or she is described in one or more of clauses (i) through (v) of Section 202(x)(1)(A) of the Social Security Act (42 U.S.C. § 402(x)(1)(A)(i) through (v)). For a Payment made with respect to a joint return where only one spouse is incarcerated, you only need to return the portion of the Payment made on account of the incarcerated spouse. This amount will be $1,200 unless adjusted gross income exceeded $150,000.

There’s just one problem: there is no such limitation in the CARES Act. And, as noted with respect to decedents (posted yesterday), there’s no direction about what to do if those checks have already been cashed (or worse, spent). Keep in mind that as of today, Treasury says that more than half of all payments have been delivered… And yet, these rules were just posted today.

To be clear, there are some instances where Congress intended to keep those who are incarcerated from benefiting from relief. For example, at CFR §120.110 (Code of Federal Regulations), businesses with “an Associate who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude” are ineligible for applying for Small Business Administration (SBA) loans. And that’s real authority: the CFR is the codification of the general and permanent rules and regulations published in the Federal Register.

In contrast, this is an FAQ on the IRS website. Keep in mind that if an FAQ is not published in the Internal Revenue Bulletin, the IRS may change its position at any time. The IRS has made clear that FAQs “and other items posted on IRS.gov that have not been published in the Internal Revenue Bulletin are not legal authority . . . and should not be used to sustain a position unless the items (e.g., FAQs) explicitly indicate otherwise or the IRS indicates otherwise by press release or by notice or announcement published in the Bulletin.”

(Updated May 21, 2020)

Shortly after stimulus checks started going out, I began receiving inquiries from taxpayers who had received checks intended for deceased relatives. Some media outlets – and politicians – wanted to make a big deal out of this, suggesting that it was indicative of something wrong at the Internal Revenue Service (IRS). Actually, it’s pretty logical. Here’s how that could happen and what you should consider doing next.

Remember that the checks are advances of a new, temporary credit for 2020. Since taxpayers haven’t filed for 2020 yet, the IRS will “advance” your payment based on your most recently filed tax return (2018 or 2019 tax return). 

In other words, the stimulus check acts like a refund for a new, temporary tax credit that you get in advance based on your 2020 income. That’s confusing because you don’t know how much you’re going to earn in 2020, but it’s why the IRS is using earlier returns. But since it’s an advance payment on a new credit does not affect your “normal” tax refund for 2020: you won’t lose out on your expected tax refund for 2020 with the check.

And of course, Social Security, Railroad retirees, VA and SSDI beneficiaries who do not usually file a tax return will receive checks automatically. 

Under the CARES Act – the law created by Congress authorizing the stimulus checks – there is no “clawback” provision. That means, for example, that a check that is sent to you in 2020 based on your 2018 that’s too much (because, say, your income will be too high in 2020) is considered a math error. You can keep it.

Sounds good, right? And the same reasoning should apply to stimulus checks sent to a decedent. There’s no mechanism for the IRS to get it back. And that’s what Congress intended because the idea was to get the money into the hands of taxpayers quickly.

That should be the case with a deceased taxpayer’s stimulus. Assuming that there’s no fraud, the checks were sent out by the IRS in good faith based on the available facts. There should be no reason to send them back.

That’s basically what an IRS spokesman, Eric Smith, told the Washington Post in April. “We are aware of all the various issues involving surviving spouses and other heirs and are still working on them,” he said, explaining that the payments may not have to be returned depending on the circumstances.

Most tax professionals – including me – agreed with that approach. 

According to Nina Olson, the founder of the Center for Taxpayer Rights and the former head of the Taxpayer Advocate Service, the Treasury Department may not even have the power to compel people to return the payments. “It may be the IRS made a mistake by making the payment to a deceased person. It can certainly ask folks to give the money back. I don’t see the legal authority for adjusting it on the 2020 return,” she told USA TODAY. (I agree.)

However, a week after Smith made his comments to the Washington Post, Treasury Steven Mnuchin told the Wall Street Journal that decedent’s checks should be returned. He didn’t offer any real support for this position, nor explain how this might happen. More importantly, no official IRS guidance has been released.

However, a taxpayer has reported that her stimulus check arrived in an envelope advising:

IF RECIPIENT DECEASED, Check here and drop in mailbox.

She even sent a picture:

(Spoiler alert: She’s not deceased, so she kept hers.)

But if she were deceased, there’s nothing in the law (so far as I see) that would oblige her beneficiaries to return the check.

And procedurally, there are still issues: 

  • What if the check was direct-deposited and not mailed?
  • What is the “cut off” for the dates of death? 2018? 2019? 2020?
  • What if the check is for joint taxpayers?

Statistically, the number of taxpayers in receipt of a check belonging to a decedent has to be very small. The U.S. population in 2019 was close to 328 million: on average, there are fewer than three million deaths in the U.S. each year. That means that less than 1% of Americans tend to die in a year. Assuming that the IRS sends checks to all decedents who would have qualified if they had lived, it’s a tiny, tiny number.

In contrast, I’ve received numerous reports from living taxpayers who have not received the right amount in their check or haven’t received payment at all. It might be a better use of Treasury’s time and other resources to track those down rather than find ways to attempt to clawback from widows and orphans.

In the meantime, I’ve been asked what to do with the checks. Some taxpayers have suggested that they want to return them: if you want to and it’s easy (like dropping it back in the mailbox), there’s nothing in the law that says you have to keep the money. But it may not be that easy. And, some tax and legal professionals have suggested that those in charge of estates might have a fiduciary obligation to keep and not return the money. It’s not clear.

On May 6, the IRS added the following FAQ answer on its website

A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions about repayments. Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000. 

I do not believe this is the correct interpretation under the statute. And as noted earlier, I don’t see how the IRS can claw it back if you don’t return it, and I don’t understand the rationale for the demand.

But this “advice” is on the IRS website. Keep in mind that if an FAQ is not published in the IRB, the IRS may change its position at any time. The IRS has made clear that FAQs “and other items posted on IRS.gov that have not been published in the Internal Revenue Bulletin are not legal authority . . . and should not be used to sustain a position unless the items (e.g., FAQs) explicitly indicate otherwise or the IRS indicates otherwise by press release or by notice or announcement published in the Bulletin.” So it’s not official guidance – the IRS even says so.

My advice: there is no direction – to date – that says you have to return the checks. I think it makes sense to hold onto the checks now and wait for official guidance from the IRS. If you have time-sensitive or more specific questions, check with your tax or legal professional. 

Folks who receive Supplemental Security Income (SSI) and Veterans Affairs (VA) disability compensation and pension benefits are entitled to a stimulus check. If you receive SSI and VA benefits but do not file a tax return, you can get your $1,200 payment without taking an extra step.

If, however, you receive SSI or VA benefits AND you do not usually file a tax return AND you also have a child or children under 17, you must act by today, May 5, 2020, to receive the $500 payment for each qualifying child with your $1,200 payment. If you miss the deadline, you will receive your $1,200 payment, but you will need to wait until next year to file a tax return to get money for your qualifying child.

Here’s what you have to do. If you receive SSI or VA benefits AND you do not normally file a tax return AND you have qualifying children under the age of 17, click over to the Internal Revenue Service (IRS) website’s Non-Filers: Enter Payment Info Here online tool by May 5. You’ll be asked to add each qualifying child’s information.

A qualifying child is someone who:

  • Is your child, stepchild, eligible foster child, sibling, half-sibling, stepsibling, or descendant of one of those, including your grandchild, niece, or nephew.
  • Can be claimed as a dependent on your tax return.
  • Was younger than 17 at the end of the 2019 tax year.
  • Is a U.S. citizen, U.S. national, or U.S. resident alien.
  • Has a valid Social Security number (SSN) or an adoption taxpayer identification number (ATIN).

Also, if you’re married, you must use the IRS Non-Filer tool to claim the full $2,400 payment as long as your spouse didn’t receive Social Security (disability or SSI) benefits, Railroad Retirement Board benefits, or VA benefits in 2019, if your spouse did not have to file a tax return in the last two years.

You may have a dependent over the age of 17, including a student who lives with you or a parent. Unfortunately, you won’t get money for those dependents. If they’re claimed as a dependent, they also aren’t eligible for their own check.

You will normally receive your check the way that you receive your benefits. However, if you are a Direct Express card holder and you use the Non-Filer Tool to enter dependent information, you will not receive your automatic $1,200 payment on your Direct Express card. You will receive both your $1,200 payment and each child’s $500 payment on a non-Direct Express bank account you can provide, or by mail if you leave bank information empty. This is only true if the IRS has not already processed your $1,200 payment.

If you do not use the Non-Filer Tool, you will receive your automatic $1,200 payment on your Direct Express card, and you will need to file a tax return next year to get a $500 payment per eligible child.

Over the past five weeks,  26.5 million Americans have filed initial claims for unemployment, according to the U.S. Department of Labor. That’s in addition to the 7.1 million unemployed Americans reported before most of the country shut down in response to the COVID-19 pandemic. 

On March 27, 2020, the President signed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” into law. A significant feature of the CARES Act is an expansion of unemployment benefits, including for part-time, self-employed, and gig workers. 

The amount that you can receive varies by state but typically works out to about half of your prior income. Benefits are generally payable for 39 weeks (pre-CARES Act, it was 26 weeks in most states). In addition to state benefits, the federal government is paying out an additional $600 each week until July 31, 2020.

The rules for eligibility also vary by state since each state sets its own guidelines. Typically, however, you qualify if you are unemployed through no fault of your own, and you meet work and wage requirements established by your state. You can review the details of your state’s program here.

Of course, these numbers just tell half of the story. There’s a lot to consider, including how to pay the bills, getting a new job, and figuring out your unemployment benefits. The last thing that you’d need to worry about is taxes, but you shouldn’t push them off until next year – and you may be able to take advantage of tax benefits available now. Here are 11 tax-related tips to help you sort it out:

  1. For federal income tax purposes, unemployment compensation is taxable. To be clear, this includes your state benefits and the $600 payment from the feds. That amount (again, including the $600 per week) will be reported to you on Form 1099-G. It’s important not to forget this part: don’t spend your benefits without thinking about the consequences.
  2. To lessen any surprises, you can choose to have federal income tax withholding from your benefits during the year. This is similar to withholding on your paycheck and means that you should owe less at tax time (or preserve your refund if you’re entitled to one).
  3. If you’re worried that you might owe at tax time, consider making estimated payments during the year to avoid a potential penalty. The Internal Revenue Service (IRS) has waived penalty and interest on payments previously due on April 15, 2020 (now due July 15, 2020).
  4. Generally, withdrawals from your pension or retirement plan are taxable unless they are transferred to a qualified plan like an IRA. As part of the CARES Act, the tax isn’t due all at once: you have three years to pay it back. The treatment of retirement income or accrued benefits can be tricky, so check with a tax professional or your benefits administrator for details.
  5. If you’re considering tapping your retirement account to get extra cash, there’s some good news. Typically, a 10% early withdrawal penalty applies if you raid your retirement account before you reach 59-1/2 unless you meet an exception. But for 2020, you can withdraw up to $100,000 from your 401(k) or IRA without being subject to the penalty. You’ll still owe income taxes on the withdrawal (see again #4).
  6. If you need extra cash, you may be able to take a loan against your 401(k). Under the new law, you can borrow up to 100% of your account or $100,000, whichever is less, through September 23. When it’s time to pay it back, you can defer repayment up to a year – and you have five years to pay it back without being subject to tax. Be sure to check with HR: while the law permits these changes, they don’t mandate them, and the rules for your plan may vary.
  7. If you made a contribution to your IRA during the year – but now you need the money back – you’re also in luck. Contributions returned before the due date of your tax return can be withdrawn without penalty. You’ll need to take out the contribution as well as any interest or dividend earned. Of course, if you take it back, you can’t claim a deduction for the initial contribution on your return.
  8. Food stamps and other forms of public assistance that might be available to you are generally not taxable. Don’t be afraid or embarrassed to ask about benefits. Temporary programs like Supplemental Nutrition Assistance Program (SNAP), WIC (Women, Infants, and Children), and those offered through TANF (Temporary Assistance for Needy Families) can help put food on the table for your family while you continue to look for work.
  9. If you’re now responsible for paying your own health care, you may be able to deduct the cost of those insurance premiums, including COBRA costs, as medical expenses. You would include the costs of those premiums along with your other eligible medical expenses on Schedule A if you itemize. Keep in mind that those expenses are only deductible to the extent that they exceed 10% of your adjusted gross income. Here’s a quick example: Let’s say your medical expenses total $4,500, and your AGI is $20,000. You can deduct $2,500 of medical expenses: $4,500 (total expenses) less $2,000 (10% of $20,000). And don’t forget that you can use an established health savings account (HSA) to pay medical expenses: the money in the account is yours, even if you lose your job.
  10. Don’t overlook available tax credits that you didn’t qualify for when you were working. Even though your income may have exceeded the threshold for the Earned Income Tax Credit (EITC or EIC) in prior years, you may now be eligible for the credit. Assuming you meet the earned income restrictions and other criteria, you may qualify for the EITC – and you don’t have to have kids to collect. Bonus: it’s refundable so you can get a check even if you didn’t owe any tax.
  11. If you’re relying on the kindness of strangers – or friends and family – to get through this tough time, those gifts probably aren’t taxable to you. As a rule, the person making the gift – not the recipient – is responsible for any applicable federal gift taxes. For federal income taxes, the mere receipt of the gift is not a taxable event. Just keep in mind that the underlying gift keeps its taxable character, so if it’s throwing off interest, for example, that interest would be taxable to you.

If all of this seems a bit overwhelming, remember that help is available. Don’t be afraid to ask questions about benefits, deductions, and credits that can help reduce your tax burden at tax time. Ask your tax professional for help or contact the IRS for assistance.

Over a month ago, I wrote an article about the home office deduction that attracted very little notice. I figured folks were either overwhelmed with COVID-19 coverage, or the article didn’t apply to them. More recently, I realized that I was wrong: taxpayers assumed the article didn’t apply to them.

Since then, I’ve received tweets, comments, and emails from workers asking about the deduction because they’re sure that it applies to them. They are, after all, working from home through no reason of their own. They cannot physically return to the office or other workplace. And their employer may require them to work from home as a condition of their employment. In other words, for many, it’s work from home or lose a paycheck.

Those all feel like excellent reasons to be able to deduct the cost of the internet and other home office expenses. But they are not enough. As a result of the Tax Cuts and Jobs Act (TCJA), for the tax years 2018 through 2025, you cannot deduct home office expenses if you are an employee. 

To be clear, there is no hardship exemption or coronavirus waiver. It’s a very bright-line rule: employees who work from home can no longer claim the home office deduction. The reason you are working from home does not matter.

The TCJA did not change the home office expense rules for self-employed persons and independent contractors. To be clear, you are not self-employed just because you are working from home. If you are receiving a paycheck from an employer, and those wages will be reported on a W-2, you are an employee. Working from home is not enough, on its own, to cause a switch to a 1099.  And while you certainly may receive a form W-2 and a form 1099 in the same tax year, you should not receive a form W-2 and a form 1099 for the same work from the same employer.

If you are self-employed – even as a gig worker – you can continue to deduct qualifying home office expenses. Typically, you would report the home office deduction on federal form 8829, Expenses for Business Use of Your Home, which is filed along with your Schedule C, Profit or Loss From Your Business, on your 1040.

To qualify for the home office deduction, the part of your home attributable to business must be “exclusively and regularly for your trade or business” and that part of your home must be your principal place of business; a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business; or a separate structure used in connection with your trade or business. In other words, to be deductible, your home office must be your actual office and not just at your home for convenience. And more importantly, if you use part of your home as a workspace, it must be space that is used solely for business.

A dedicated space doesn’t mean that you have to have a separate room. You can have a dedicated space – a table in the corner that’s just used for your office work – in a room used for other things. You just need to calculate the space and figure the deduction appropriately.

If you have more than one business location, including your home, that doesn’t disqualify you: you just need to make sure that you meet the criteria for the home office deduction. Again, to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business.

In a gig economy, you might also have more than one business. The same home office can be the principal place of business for two or more separate business activities. But you can’t combine the tests: whether your home office is the principal place of business for more than one business must be determined separately for each of your trades or businesses.

Calculating the deduction used to take a bit more math. For years, the rule was that you must figure the amount of space attributable to your business and compare it with the total and use that amount to figure the deduction. So, if your home office space is 200 square feet and your home is 2000 square feet, you would claim 10% (200/2000) of your home-related expenses (insurance, taxes, mortgage interest, etc.) as a home office deduction. That’s still an option.

However, since the 2013 tax year, there’s also a simplified option for the home office deduction. With the simplified option, you may claim a standard deduction of $5 per square foot of home used for business up to a maximum of 300 square feet. Using the same numbers as above, if your home office is 200 square feet, the simplified option for the home office deduction would allow you to claim $1,000 (200 square feet x $5) as a home office deduction.

But remember: those rules don’t apply if you’re an employee in 2020: you cannot deduct home office expenses if you are an employee. It’s one of several changes on Schedule A. Those changes were intended to be absorbed or mitigated by the doubling of the standard deduction.

A lot of taxpayers didn’t mind so much when the law changed in 2017, but now they do. If this bugs you, don’t shoot the messenger. Instead, contact your Congressional official: 

The loss of the home office deduction for employees has some taxpayers wondering whether it makes sense to quit their day jobs and become self-employed. That’s an individual decision, but if you’re focusing simply on the home office piece, the numbers probably don’t support that kind of shift. For more to consider when it comes to business-related decisions in light of tax reform, check out this article.

The Taxpayer Advocate Service (TAS) has announced a new tool to assist taxpayers with claiming their Economic Impact Payment (EIP), sometimes referred to as a stimulus check. This new tool is for people who know they qualify and want to know what steps, if any, need to be taken to receive the payment.

You can try out the tool here. Note that this is NOT the Internal Revenue Service (IRS) website. It’s the IRS TAS website. You can tell that it’s an official government website because it ends in .gov (don’t follow links to .com sites that allege to be affiliated with the IRS).

The tool does not determine eligibility for a check. You should be eligible for a payment if you:

  • Are a U.S. citizen, permanent resident or qualifying resident alien;
  • Cannot be claimed as a dependent on someone else’s return;
  • Have a Social Security number (SSN) that is valid for employment (valid SSN); and
  • Have adjusted gross income (AGI) below an amount based on your filing status and the number of your qualifying children. Checks begin 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.

 You are not eligible for a payment if you:

  • Can be claimed as a dependent on someone else’s return;
  • Do not have a valid Social Security number (a taxpayer with an individual taxpayer identification number (ITIN) does not qualify);
  • Are a nonresident alien;
  • Filed Form 1040-NR or Form 1040NR-EZ, Form 1040-PR or Form 1040-SS for 2019; or
  • Have adjusted gross income (AGI) above the amount based on your filing status and the number of your qualifying children. 

The tool follows an interview format. It asks questions related to your tax filing and other factors. As you answer, it walks you through the next steps – if any – you need to take to claim your EIP or stimulus check.

If you have additional questions, you can visit the Taxpayer Advocate Service Coronavirus (COVID-19) Tax Updates webpage.

It has long been the case that if you owe money, your federal income tax refund can be seized to satisfy your debt. Examples of federal debts that might trigger offsets include federal income tax delinquencies and student loan defaults. States can ask the Internal Revenue Service (IRS) to intercept, or offset, federal tax refunds for state tax obligations or money owed to state agencies: this includes the state’s child support enforcement office’s authority to collect on child support arrears.

In the Food, Conservation, and Energy Act of 2008, the government gave itself the right to chase taxpayers for old debts indefinitely. And the easiest way to do it is through an offset. It’s referred to as “offset” since the seizures are part of the Treasury Offset Program (TOP); the program is administered by Financial Management Service, a branch of the U.S. Department of Treasury.

How does an offset typically work?

  1. If you owe money to a government agency, the agency is supposed to give you notice and allow you to resolve or dispute your debt. If you don’t reach a resolution, the agency can send the information about your debt to TOP. With respect to child support, individual state child support agencies submit your info, including the amount of past-due support through the Office of Child Support Enforcement (OCSE) to Treasury. You will then receive a Pre-Offset Notice that shows the amount of past-due support you owe, and information about how to contest the debt amount.
  2. Your name and the amount owed is input into the TOP database.
  3. If you are entitled to funds from the federal government (like a tax refund check), TOP searches the database.
  4. If your name pops up, your payment is offset by all or part of the amount you owe to pay your debt. The actual amount that Treasury deducts from your tax refund may differ from the amount on the Pre-Offset Notice: the state updates the debt amount regularly, but may not issue a new notice each time the debt amount changes. 
  5. After the offset, Treasury will mail a Notice of Offset to you explaining that all or part of your federal tax refund has been intercepted because of the support debt.
  6. The remainder of the check after the offset, if any, is sent to you (the person who owed the debt).

So what happens to the money that was intercepted or offset? It does not automatically get delivered to the person who is owed the child support.This is a popular misconception and one that has confused folks with respect to the stimulus checks. When the refund (or stimulus check) is intercepted, it is not simply mailed or deposited to the person who is owed child support. What happens is that the state that submitted the case typically receives money from the offset within two to three weeks. The money is then disbursed to the proper recipient (like the custodial parent). But if the offset is from a jointly filed tax return, the state may hold the funds for up to six months before it’s distributed.

What else can be seized under the offset program? TOP can also authorize the seizure of your wages (including military pay), your retirement, contractor/vendor payments, travel advances and reimbursements, certain federal benefit payments including Social Security benefits (but not Supplemental Security Income), Railroad Retirement benefits (but not tier 2), and Black Lung part B benefits. TOP also has a catch-all that allows them to collect from federal payments that are otherwise not exempt by law or by an action of the Treasury.

How does this apply to my economic impact payment (EIP), or stimulus check? The CARES Act made clear that the only reason that a stimulus check might be offset was for past-due child support. Your stimulus check may not be seized for any other debt, including back taxes.

How much of my stimulus check can be seized? Your entire stimulus check can be offset, up to the amount of your child support debt.

What about if you’ve lost my job or have another financial hardship? There is no reduction or other exception available, even for economic hardship.

What if you file a joint tax return? Typically, if your share of your tax refund as shown on your joint return was, or is expected to be, applied against your spouse’s past-due federal debts (including student loans), state taxes, or support payments, you are considered to be an injured spouse. This typically happens when the tax ID number of the person responsible for the tax liability triggers an offset of the entire refund. If you are entitled to injured spouse (not to be confused with innocent spouse) relief, you may be able to get your share of the tax refund released to you.

Is it always an even split? Your share is determined by a formula: it’s not necessarily a 50/50 split. An allocation is made as if you and your spouse each filed a separate tax return instead of a joint tax return. That means each of you must allocate your own wages, self-employment income and expenses (and self-employment tax), and credits such as education credits to the extent possible on separate forms. Items that are commingled, such as interest earned in a joint bank account, would be divided equally. The IRS uses the allocation to determine which portion of the refund, if any, would be due to an injured spouse.

Does the same rule apply to stimulus checks? The same relief is available for those whose stimulus check is impacted by a spouse who owes child support debt. You can file Form 8379, Injured Spouse Allocation (downloads as a PDF), with the IRS.

I don’t agree with this: who can I call? If you have concerns about the status of a debt or an offset, you can call the TOP Call Center at 1.800.304.3107. Don’t call IRS since IRS can’t reverse an offset or give you information about the debt.

While TOP can answer some questions, they can’t make arrangements for you to pay off your debt, tell you when the obligation was alleged to have been incurred, or even tell you how much you owe. TOP can only give you the contact information for the federal or state agency attempting to collect the debt.