Letter to the Editor: Here's advice on those $1,200 economic impact payments

Posted: Thurs, Apr 2, 2020 09:18 AM

(The following UPDATED Letter to the Editor has been submitted by Decorah attorney Dan Fretheim):

"Senior citizens and others who have not filed income tax returns because of low income will need to file a 2019 income tax return in order to receive their $1,200 Economic Impact Payments from the IRS. (see new information below)

As a part of the recently enacted CARES Act, eligible taxpayers will receive an Economic Impact Payment of up to $1,200 for individuals or $2,400 for married couples. Parents will also receive an additional $500 for each qualifying child. An individual's eligibility for these Economic Impact Payments will be based on their 2019 federal income tax return, or their 2018 federal income tax return if they have not yet filed their 2019 return.

It was originally believed those individuals who did not have an income tax filing obligation, because of low income, would not have to file an income tax return and would still receive their $1,200 Economic Impact Payment (based solely on their Social Security or Railroad Retirement benefits). However, the IRS has now clarified this saying "People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax."

A caution to all seniors: The IRS will not mail, email or call you requesting this information, and any such mail, email or telephone call asking for your social security number or bank account information for this $1,200 Economic Impact Payment are likely scams.

As with everything COVID-19 related, things change rapidly, and the return filing requirements for purposes of the Economic Impact Payments for low income individuals could change in the future. You should contact a tax professional for additional information relating your individual situation.

(UPDATE: After receiving significant backlash from citizens and elected officials alike, late Wednesday the Treasury Department and the IRS changed course on this issue.

The Treasury Department released a new statement saying "[T]he IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate $1,200 Economic Impact Payments to Social Security recipients who did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits."

This was quickly followed up by the IRS changing their website to confirm "[T]he IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2018 or 2019. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return."

Bottom line, individuals receiving Social Security or railroad retirement benefits (and who do not otherwise have to file a tax return because of low income) will not have to file a 2019 tax return to get their $1,200 Economic Impact Payment.")