During the pandemic crisis, nations worldwide are adopting various emergency measures for tax relief and supporting their economies through the crisis. It is a great decision to provide tax relief and other benefits to the people and many industries etc. in this tough time of pandemic until this emergency goes away. Therefore, governments of many nations have already done tax planning and taken some steps in this regard to reduce and minimize the waves of economic shock and health crisis by fiscal and health relief.
All the nations are taking all the required measures to help people, as the epidemic creates health issues and other economic shocks.
In the United States, Coronavirus Aid, Relief, and Economic Security Act, or Cares Act, have been signed into the law. In American history, the most significant emergency relief bill has introduced and initiated in the form of a stimulus package of 2 trillion dollars. People who will meet the requirements will receive the stimulus check as a one-time cash payment of 1200 dollars from the package.
The announcement of this tax planning in the form of stimulus checks and aid of $1200 is excellent. But it came with many questions. So, there are some FAQs and their answers.
TAX Planning To Implement Tax Relief for Households And Businesses Affected By Pandemic Crisis:
The Cares Act Legislation provides many benefits and assistance to homes and businesses affected by the pandemic:
Tax payments were deferred from April 15 to July 15 without penalties and any interest.
For individuals and spreading out of unemployment insurance coverage, there are substantial tax rebates.
Among various tax benefits for business, the act includes refundable tax benefits for payroll taxes and allows the employer to delay social security payroll taxes with half-payment outstanding December 31, 2021. The rest payment is unpaid December 31, 2022, relaxed interest deduction rules and Carrying back of losses.
And for others benefits like a loan to businesses of 750 billion dollars to support employee’s costs, the opening of paid sick leave for the short term.
Likewise, in tax planning, 150 billion dollars as relief funds will be circulated between the states.
Some FAQs about tax planning and stimulus checks:
What is a pandemic (coronavirus) stimulus check?
It is an economic relief in the mode payment — also naming as the “economic impact payment” by the IRS, “recovery rebate” by the government, and “stimulus check” called by the people. Technically, it is the tax credit given in advance to offset 2020’s federal income taxes.
Who will receive a stimulus check?
One will receive the stimulus check:
- Having a Social Security number
- Filed taxes in 2018 or 2019, or don’t make enough to file but receive federal aid payments, including disability benefits, veteran affairs benefits, Social Security retirement, or Supplemental Security Income.
- Who made single fillers less than $99,000, for household head $136,500, or $198,000 for married filers, by latest filed tax returns
- People who are not claimed dependent on somebody else.
Will a stimulus check affect my tax refund?
No. As the tax return is filed, you’ll get your full tax refund next year. This relief is a tax credit done in the tax planning, to reduce tax payable on a dollar to dollar basis. The government is relieving the taxpayers by providing early credit in the form of cash payment.
What happens if taxes are filled?
If 2018 or 2019 taxes are filed, then the tax return will reflect:
- For single filers- an adjusted gross income below $99,000,
- Heads of the household -$136,500
- For married filers – $198,000
What happens if taxes are not filed?
In the case of not filed taxes but received federal benefits, this information will be used by the government for a stimulus check.
People can access the tool on the IRS website, who didn’t have a tax obligation in 2018 or 2019 and not received federal aid payments, including disability benefits, veteran affairs benefits, Social Security retirement, or Supplemental Security Income but they want to get paid. October 15, 2020, is the last date to submit the information.
The money from the stimulus check is taxable?
It is clear that there is confusion among people about the subject of income taxes. And the answer is NO; the money received from the check is not taxable.
What if I am obliged right now to back the taxes?
You will still receive the check if you meet the requirements. Compared to tax refunds, these payments are treated differently in tax strategies. Usually, a refund could be if the person owes back taxes, but here it’s not the same. If someone is under the income thresholds, they should get a stimulus payment even with the tax debt. Because of the debt, only the parents with unpaid child support could get their check reduced.
