INDIANAPOLIS, Ind. – Stimulus checks were expected to hit bank accounts for 80 million people Wednesday. Money that will make a big difference for some and while we wait for the others, there are still many questions surrounding the payments.
“I think it’s going to be an extremely challenging next few months,” stated Kyle Anderson, an Economist for the Kelley School of Business at Indiana University.
Anderson, along with tax expert Ben Smith, CEO of Estep-Doctor & Company CPA are closely watching what will happen once stimulus checks hit your account.
“It’s exactly what it says it is,” said Smith, “It’s an amount to stimulate the economy to get money flowing back to the economy.”
Individuals could get up to $1,200 and couples $2,40, plus $500 per child. With money on the line, questions begin to stack up.
Our first question, do you have to pay taxes on the money that you receive?
“No, it’s not taxable and no you don’t have to pay it back,” Smith explained.
To see how much, you’re getting and when, the IRS launched an online tool to track the payments called Get My Payment. You’ll need to enter your Social Security number, date of birth and address to see where your payment stands. The application should provide details on the status, payment type and whether the IRS needs more information. However, many people are reporting issues with the tool.
Our second question for the experts, the money is supposed to stimulate the economy, so what should you spend it on?
“I think what they should use it for depends on which situation people are in,” Anderson explained, “There are a lot of folks who are losing their jobs or getting their hours cut back and they’re going to need those for bills, absolutely is a good purpose for it.”
Anderson says, if you’re not falling behind on bills and are financially stable it’s okay to save it, too.
You could always use the money to help others or support small businesses.
“Rather than save it and spend it on something frivolous, think about how you can do good with it,” said Anderson.
Our third question for Smith focused on a specific tax question many parents may have. If you had a child in 2019 and haven’t filed your taxes yet, are you still able to get the $500 for your dependent?
“It’s called an advanced tax credit for your 2020 taxes, Smith explained, “So, even though they’re basing it on your 2018, 2019 income and situation, they’re doing that because it’s readily available. So, when you file your 2020 taxes if you’ve had a child that would qualify under 17 then you will still get that 500-dollar credit.”
Smith added, “The biggest question I’ve had that I don’t know the answer to be honest is if you’ve got children in divorce where one spouse claims the other, so it’s possible you get a stimulus check based on your 19 taxes and then in 2020 the other spouse claims the child and gets it also, I’m not sure how that works – but that’s the way it looks like it’s going to happen.”
Although it’s an uncertain time, it’s not the time to be uncertain about your finances, Smith and Anderson agree, reach out for help.
“Don’t believe what you see on social media,” Smith added, “Clearly, the best thing you can do is reach out to a tax professional and ask, that’s what were here for.”