Stimulus Check – Get your Direct Deposit info to the IRS this week
Remember, if the IRS does not have your direct deposit information on file (presumably because you did not receive a 2018 or 2019 refund), you must provide that info to the IRS website by noon Wed, May 13h – otherwise a check will be mailed and it could be a while before you receive your stimulus check.
More information is on the IRS website:
If you’ve tried the site previously without success – you may want to try again. We’ve had reports of additional success with the site over the past few days.
In other news …
Here at Fit Money CPA, we’ve had a lot of questions around the government stimulus packages and CARES act. I’d like to take this opportunity to answer some of them.
Will the stimulus check I receive affect my personal taxes?
The short answer is no – the long answer is a bit more complex. The money is given as a credit against your 2020 taxes. Here’s an example of how it works:
Suppose you expect (for 2020) to have $50,000 in income. That means you’d owe about $4,300 in taxes. If you paid extra each month and withheld a total of $5,300, you’d get a $1,000 tax refund on your tax return.
With the CARES Act, you receive an additional “credit” for $1,200 and your tax liability is lowered from $4,300 to $3,100. Now, you would expect a $2,200 refund ($5,300 paid minus the $3,100 owed). Instead of paying you $2,200 after taxes in 2021, the IRS is sending you a $1,200 check now, so your actual refund at tax time is still $1,000. Since this is essentially an early tax refund on taxes you will pay in 2020, you don’t have to pay it back and as Senator Dianne Feinstein’s office confirmed, it is not taxed
As you can see, there is is no practical effect on your taxes Here’s a bit more information on our website:
How do I ensure my small business Paycheck Protection Program loan is maximally forgiven?
This is a complex subject and changes daily. Given the new rules, it looks like very few loans will be fully forgiven. it’s important you do everything you can to ensure that as much as possible is forgiven. In short, ensure that you work with your banker and your tax professional (Fit Money CPA) to document how you’ve spent the money, and do your best to spend the majority on actual payroll. Some business rent and business utilities may qualify as well. We can help, give us a call at (502) 454-2755.
A bit more info is on our website:
As always, we’re here to help. Visit our website for the latest in financial information, and feel free to email us or give us a call so we can help.
Please feel free to pass this information along to those who would benefit.
Remember, during this time of uncertainty, be assured that the staff at Fit Money CPA has your back. We are open and taking all appropriate precautions to keep our clients and our staff safe, including suspending in person meetings. You can always reach us via email, telephone and fax.