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All Contents © 2020The Kiplinger Washington Editors
By Rocky Mengle, Tax Editor
| May 9, 2020
Trying to keep track of all the what's, when's and why's about stimulus checks will make anyone's head spin. This is especially true for Social Security recipients, who have had to deal with the IRS's flip-flopping on important questions like whether a tax return is required to get a check. There are also several special rules that only apply to people receiving Social Security benefits.
But don't worry—we've got you covered. We combed through the IRS and Social Security Administration guidance on stimulus checks and pulled out the 10 of the most important things Social Security recipients need to know about their stimulus check. Hopefully, we'll answer all your questions, point you in the right direction for more information, and provide a little advice for moving forward.
Most Social Security recipients who filed a 2018 or 2019 tax return and had a refund directly deposited into their bank account have already received their payment. If you filed a 2018 or 2019 return, but you didn't have a refund directly deposited into your account, you might have to wait a little longer because the IRS has you scheduled to receive a paper check (see below for information on how to request a direct deposit payment in this situation).
If you didn't file a 2018 or 2019 tax return, the IRS will get the information it needs from the Social Security Administration. The IRS started sending payments based on SSA information in late April, but it could still take some time before your payment arrives.
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If you started receiving Social Security benefits in 2020 and did not file a 2018 or 2019 tax return, use the IRS's "Non-Filers: Enter Your Payment Info Here" tool to provide the IRS with the information it needs to send you a payment. You'll get your payment faster if you also provide the bank account information necessary for direct deposit.
The IRS has an online tool—called the "Get My Payment" portal—that lets you:
The portal can be found at irs.gov/coronavirus/get-my-payment.
Social Security recipients can use the portal to track the status of their payment, even if they didn't file a tax return.
However, Social Security recipients can't use the portal to provide bank account information if they didn't file a tax return for 2018 or 2019. The IRS will get that information, if it is available, from the Social Security Administration.
If you filed a 2018 or 2019 tax return and had a refund directly deposited into your bank account, you'll receive your stimulus payment by direct deposit, too. If you filed a 2018 or 2019 return without requesting a direct deposit refund, you'll receive a paper check in the mail, unless you went onto the IRS's "Get My Payment" portal and gave the IRS your bank account information. (Paper checks take longer to arrive.)
If you didn't file a 2018 or 2019 tax return, you'll automatically receive your payment by direct deposit, debit card or paper check—whichever way you normally receive your Social Security benefits.
Social Security recipients who have (or care for) dependent children 16 years old or younger might not get all the money they're entitled to in their stimulus check. If you didn't file a 2018 or 2019 return, you had until noon on April 22 to send the IRS information about the children to get an extra $500 per child added to your payment. (The information had to be provided online using the IRS's "Non-Filers: Enter Your Payment Info Here" tool.)
Note that, if you used the non-filers tool to add a child, you can't receive your payment on your Direct Express card. You can only select a bank account for direct deposit or leave bank information blank and receive your payment by mail.
If you didn't provide the IRS with the information by the deadline, your stimulus payment will be for the standard $1,200 amount. However, you'll be able to claim the additional $500-per-child amount when you file your 2020 tax return next year. So, you'll still get paid, but you'll just have to wait a while for it.
Not everyone is entitled to a stimulus check. For instance, if you can be claimed as a dependent on someone else's tax return, then you're not eligible for a stimulus check payment. If, for instance, you live with one of your adult children who cares for you, then you won't get a check if your child claimed you as a dependent on his or her last tax return.
Uncle Sam can tax up to 85% of your Social Security benefits. To calculate the federal tax on your benefits, you first need to determine your "base income" (often referred to as your "provisional income"). Your base income is equal to the combined total of (1) 50% of your Social Security benefits, (2) your tax-exempt interest, and (3) your adjusted gross income (not including the student loan interest deduction or the tuition and fees deduction).
If you're single, none of your Social Security benefits are taxed if your base income is less than $25,000. If you're married and filing a joint return, the threshold is $32,000. If a single filer's base income is between $25,000 and $34,000, then up to 50% of his or her Social Security benefits may be taxable. The 50% rate is applied to joint filers with a base income from $32,000 to $44,000. Finally, if your base income is more than $34,000 on a single return, or $44,000 on a joint return, up to 85% of your benefits may be taxable.
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Any additional taxable income will increase your adjusted gross income, which then increases your base income for Social Security tax purposes. If your base income goes up enough to move you from the 0% to the 50% bracket, or from the 50% to the 85% bracket, then you're looking at a tax increase.
The good news is that your stimulus payment is not taxable income. As a result, it will not increase your AGI, or your base income.
Many Social Security recipients are also receiving other government benefits. Eligibility for these additional benefits is often based on your income. However, stimulus payments will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.
For example, stimulus payments do not count as income, and are excluded from resources for 12 months, for the purposes of qualifying for benefits under the following federal programs that support many Social Security recipients:
In most cases, if you have a representative payee, the IRS will send your stimulus check to the payee using the same method the payee normally receives your monthly benefit (direct deposit, Direct Express, or paper check). However, the IRS has not yet determined when payments will be made to Social Security recipients who did not file a 2019 or 2018 tax return and who have a representative payee.
A representative payee is only responsible for managing Social Security benefits. Since a stimulus payment is not a Social Security benefit, representative payees are not required to account for these payments when they complete their annual accounting form, and payees should discuss the payment with the Social Security beneficiary. As a result, if you—the Social Security recipient—want to use the payment yourself, the payee should give it to you. On the other hand, you can always ask the representative payee for assistance in using the payment for something specific or to saving it. It's okay for the payee can provide that assistance outside his or her official role as your representative payee. But don't forget—the payment belongs to you.
The Social Security Administration (SSA) does not have authority to investigate or determine whether a stimulus payment has been misused. However, if the SSA receives an allegation that a payment was not used on behalf of the beneficiary, it can decide to investigate for possible misuse of the beneficiary's Social Security benefit payments. The SSA can also decide that the representative payee is no longer suitable and appoint a new payee.
If a stimulus payment is made to someone who died before it arrives—such as a recently deceased spouse—it should be returned to the IRS. The entire payment should be returned, unless it was made payable to joint filers and one spouse is still alive. In that case, you only need to return the portion of the payment made on account of the deceased person. This amount will be $1,200, unless your joint adjusted gross income exceeded $150,000.
There are different procedures you must follow when returning a payment depending on how the payment was paid and, if by paper check, whether the check was cashed. For all the details, see What to Do If You Get a Stimulus Check for a Dead Person.
If you're still working, you may be able to put your stimulus check money in an IRA and save it for later. Anyone over 50 can contribute up to $7,000 in one or more IRAs in 2020. You must, however, have earnings from work to contribute to an IRA, and you can't put more into the account than you earned. (Your stimulus payment doesn't count as earned income.)
If you've already hit the $7,000 limit in 2020, or you stopped working this year, it's not too late to contribute to an IRA for the 2019 tax year. The deadline for 2019 contributions was pushed back from April 15, 2020, to July 15, 2020. The 2019 contribution limit for people over 50 was also $7,000—so you can't contribute more if you've already put in that much.
By the way, the SECURE Act repealed the old rule that prohibited contributions to a traditional IRA by taxpayers age 70½ and older. Starting in 2020, you can continue to put away money in a traditional IRA if you work into your 70s and beyond. There were never age-based restrictions on contributions to a Roth IRA.