NEW YORK (Reuters) – In a little over a year, when Americans file their 2020 tax returns, much of what is going on with coronavirus-linked stimulus payments will finally add up.
FILE PHOTO: FILE PHOTO: U.S. currency is seen in this picture illustration taken March 6, 2020. REUTERS/Mike Segar/Illustration
Until then, prepare for confusion.
Think you got shorted on the Economic Impact Payment deposit you received on April 15? Think you got too much?
If you did not get any money, where is it? Will it come in the next round, due in a few days? Will you get the full $1,200 per adult and $500 per child under 17 or some portion thereof? Why can’t anyone answer your questions?
John Dundon had an 86-year-old neighbor stop by his house in Denver, Colorado (unmasked, without regard for social distancing), claiming he had spoken to the White House and they had asked him to talk to Dundon, who had helped him prepare his taxes.
Dundon was caught by surprise by both the visit and the inquiry.
“I have an open door policy, but I thought, ‘Ah geez, are you kidding me?’” said Dundon, an enrolled agent tax preparer and president of Taxpayer Advocacy Services.
Yet Dundon and other tax professionals have no better answers for their clients than simply calling the White House switchboard.
Phyllis Jo Kubey, an enrolled agent based in New York, has been pulling the 2020 tax transcripts for clients. She is finding garbled codes that do not offer any more information than the error message most people get when they use the status check tool provided by the IRS here
As with most tax questions, the answers are specific to your economic situation. But here are the most common issues that experts are tackling right now:
WILL THIS MONEY COME OUT OF NEXT YEAR’S REFUND?
Tax preparers are besieged with calls from clients not understanding the structure of relief payments. Tynisa Gaines even talked down her own aunt on Facebook, after she shared a meme about people having to return the money.
“This is not true. Do not share this,” advised Gaines, who is an enrolled agent based in Richmond, Virginia.
The Economic Impact Payments to individuals are technically refundable tax credits on your 2020 return, which means they exist separately from whatever your tax liability will be for that year. When you file your return, there will be some kind of worksheet to input the payment you already received and it will tally up the correct amount you should have received.
If you got too little, you will receive the difference. If you got too much, you get to keep it. (Yes, keep it, no strings attached.)
Kubey revisited the language from the 2008 return, when there was a similar stimulus payment following the financial crash. “The instructions pretty clearly said: if you got too much, you don’t have to pay it back.”
‘THIS DOES NOT MAKE SENSE!’
“No, it doesn’t make sense,” said Alan Pinck, an enrolled agent based in San Jose, California. He is dealing with a client whose husband passed away in 2019 and will be getting a stimulus payment for her spouse.
Dundon has a client who was single in 2018 and got a payment for herself and two kids. She got married in 2019 and filed a return with her new husband, who has one child. They got a payment for two adults and three children.
Divorced couples who alternate claiming their children or who split the children may have some reconciling to do.
People who had children before the end of 2020, or whose children turn 17 in this time frame, will also have wonky math.
Those who made more or less in any of the years used to calculate the payments will have to work it out in 2020.
“I truly do not believe that Congress realized that there are so many different scenarios for this money,” said enrolled agent Morris Armstrong, based in Connecticut.
WHY DO WE HAVE TO WAIT?
If you need money now, it is no solace to be told that this will all be resolved in a year, but that is the only true answer right now.
“We can do the math, but we don’t know with any certainty what the IRS is actually doing,” Gaines said. “They are just an agency doing what they are told. Congress passed this law while they were basically furloughed.”
(This story has been refiled to clarify job description for Morris Armstrong in third to last paragraph.)
Editing by Bernadette Baum