First $1,400 stimulus checks will go to those with direct deposit

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The IRS will be able to send money electronically for taxpayers who filed returns with direct deposit or bank account information. The government will send paper checks or debit cards to those households for which Treasury cannot determine a bank account.

The IRS will use information on 2020 tax returns to determine eligibility and check amount. The agency will use 2019 record for households that haven’t yet filed their taxes this year — including people who used the “non-filer portal” for previous rounds of payments.

The legislation offers full $1,400 payments to those with adjusted gross income of up to $75,000 for individuals, $112,500 for heads of household and $150,000 for married couples who file a joint tax return.

The payments are reduced for those with income above those thresholds. Payments will be capped at individuals earning $80,000 in income, heads of household with $120,000 and married couples with $160,000.

For those who lost their jobs, the timing of filing a tax return has been complicated by a newly offered tax break on unemployment benefits.

The relief measure waives taxes on up to $10,200 of jobless benefits individuals received last year. That offers an incentive to delay filing 2020 tax returns. However, since a loss of income in 2020 may make someone eligible for a stimulus check, there may be an urge to file a tax return quickly to reflect that income to the IRS.

Source: CNBC