Some might struggle to do so. Not everyone is required to file a federal return each year, and millions of households don’t.
The IRS specified in a rebate fact sheet on Monday that people who usually don’t file tax returns, such as seniors, people with disabilities, veterans and people with low incomes, “will need to file a simple tax return to receive an economic impact payment.”
Congressional offices have been “inundated” with calls from senior citizens worried they’ll miss the payments, according to a Tuesday press release from Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee.
Neal noted that because of the social distancing measures taken to limit the spread of the deadly virus, volunteer tax clinics are closed. He urged Treasury Secretary Steve Mnuchin “to find a solution that will allow vulnerable groups to receive these funds automatically, without needing to file an additional return.”
Treasury Department spokespeople did not immediately respond to a request for comment.
The Trump administration is moving fast to get the payments into people’s bank accounts. The president signed the Coronavirus Aid, Relief and Economic Security Act into law less than a week ago, after the legislation itself came together in about a week ― basically warp speed for Congress.
The legislation was packed with subsidies for businesses, funding for states and hospitals, and huge increases to unemployment benefits in addition to the direct payments to households.
Individuals earning $75,000 or less are eligible for $1,200, and couples earning less than $150,000 can get $2,400, with the size of the benefit gradually phasing down for incomes above those thresholds. Households with minor children get an additional $500 per kid. Anyone who filed taxes for 2018 or 2019, and who has already set up direct deposit with the IRS, should see the money in their bank accounts within weeks.
Theoretically, any low-income household should be able to file its taxes online for free (here is the IRS.gov page with links to approved free services). But new filers trying to get rebate payments through the free online process may have some problems.
This seemingly technical issue will determine whether large numbers of low-income veterans, people with disabilities, and seniors receive the stimulus payments. The Center on Budget and Policy Priorities and the Niskanen Center
One person in Indiana, who said their only income is disability benefits, said the free online tax software wouldn’t allow them to file online or enter bank account information. The person, who requested anonymity, had received too little in disability benefits to owe federal tax, and because they had no earned income, wouldn’t receive a normal refund, so the filing software said they weren’t eligible to file online.
“I had to print mine out and mail them in to the IRS and the Indiana Department of Revenue,” the person said in an email. “I wrote in my bank account numbers when I signed the return.”
I created a TurboTax account and tried to make a dummy return for a single person with no earned income. The software said that because my Form 1040 would have zeroes on lines for income, tax, credits and payments, that my federal return was “ineligible for e-filing, according to IRS rules.”
The IRS did not immediately respond to requests for comment.
A spokesperson for Intuit, the maker of TurboTax, said the company is ”partnering with the IRS on how we can assist individuals who do not usually file a return to submit necessary information to the IRS related to stimulus payments.”
A spokesperson for another tax prep company, H&R Block, said they’re “modifying our do-it-yourself online products” and working with the IRS and an industry trade association “so that people who are typically not required to file taxes can submit a return for free and provide bank account information.”
The IRS does not run its own free online site for tax preparation, instead outsourcing the service to tax prep companies that have been notorious for using the lure of free filing to push paid products on customers. In a separate letter on Tuesday, Neal urged an industry trade group known as the Free File Alliance to make sure non-filers don’t have a hard time getting their pandemic rebates.
The likely solution for people who are unable to electronically file their taxes will be for them to tell the online software that they had $1 worth of interest income, said Tim Hugo, director of the Free File Alliance. Hugo said it was an adequate workaround when a similar problem cropped up in 2008, which was the last time the government sent everybody stimulus checks.
“It’s been done before. It’s tested,” Hugo said, adding that the companies were working with the administration to finalize the guidance.
The hiccups in the tax filing process were exactly why some policy experts had warned Congress not to require tax filing for rebate eligibility.
“This seemingly technical issue will determine whether large numbers of low-income veterans, people with disabilities, and seniors receive the stimulus payments,” the Center on Budget and Policy Priorities and the Niskanen Center, two Washington think tanks, said in a joint statement last week.
As many as 15 million households did not file returns last year. Non-filers likely include a lot of seniors on Social Security and people with incomes so low they don’t owe federal taxes and aren’t required to file returns.
“These are among the people who struggle the most to make ends meet and thus among the likeliest to spend every additional dollar they receive, providing the greatest potential boost to the economy,” the joint statement said. “Ensuring they get these payments will both blunt the worst impacts of the current crisis for a very needy group and ensure that the payments have the largest possible stimulative effect.”
This story has been updated to include comment from Tim Hugo.
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