Reminder for 10/20/2021 Seminar: Economic NEXUS vs Sales Tax NEXUS – learn more and become better prepared to ask and answer the tough questions, such as:
- What does it mean for out-of-state sellers?
- How or will this decision affect more than just sales tax nexus?
- What does economic nexus mean for sales tax?
- Does having a physical presence in a state still matter for sales tax?
- Is the traditional nexus for sales tax still alive and well?
- Do we need to begin filing in the 45 states that have a sales taxing system?
- When to recommend to a client to file income/sales tax in that state?
Answers to Five Common Questions About 2020 Stimulus Payments
The IRS recently offered guidance about some common issues that have arisen with 2020 Economic Impact Payments (EIPs, also called stimulus payments). If you are still waiting for your EIP, received a payment addressed to a deceased individual, or believe the amount of your EIP was incorrect, here are the key things you need to know:
I have not received an EIP. What should I do if I believe I am entitled to one?
You may need to provide the IRS with more information. Even though the vast majority of eligible Americans have received their EIPs, some payments are still being calculated and sent. If you believe you are entitled to an EIP but have not yet received one, you can use the IRS Get My Payment (if you filed a 2018 or 2019 federal return) or Non-Filers portal to check on your payment status. The tool will inform you if you need to submit more information, such as your current address or banking information.
You may have been claimed as a dependent on someone’s 2018 or 2019 tax return. If anyone claimed you as a dependent on their 2019 tax return (or 2018 return if they had not filed for 2019 at the time when most EIPs were calculated), you most likely will not receive an EIP during 2020. However, if you cannot be claimed as a dependent by anyone this year, you may qualify to receive a payment. While there is no mechanism in place for people in this situation to get their EIPs during 2020, you may be able claim your EIP as a credit on your 2020 tax return.
What should I do if I receive a payment addressed to someone who passed away?
The IRS has stated that any EIP sent to a deceased individual must be returned to the U.S. Treasury. If you are a past joint filer who received a payment for a couple (usually $2,400) but your spouse is deceased, you may either return just your spouse’s portion (usually $1,200), or return the entire payment to receive a new EIP in your name.
How to return payments received as paper checks or direct deposits:
- If you received the EIP as a paper check and have not cashed or deposited it, write “VOID” on the check before returning it.
- If you cashed or deposited the EIP check or received the payment as a direct deposit, make out a check or money order to “U.S. Treasury.”
In either case, include a note with the reason you are returning the payment and the Social Security number (SSN) of the individual who has passed away, and mail the note and check to the appropriate IRS Center. You can find the address for the IRS Center for your state by visiting the IRS Returning EIPs page and using the table under Q1.
If the payment was issued on a prepaid debit card, mail it back to the card issuer (Money Network Cardholder Services) with a note explaining the reason you are returning it.
What should I do if I believe the amount of my EIP was incorrect?
If the amount of your EIP was lower than you expected, there may be several reasons for the discrepancy. For example, you may not have filed your 2019 federal return at the time your EIP was calculated, and your income was lower in 2019 than in 2018. Or you may have a dependent child who was born or adopted in 2019 or 2020 and qualifies for the $500-per-child supplemental EIP, but the child did not appear on your most recently filed return.
In these cases, save your Notice 1444 (Your Economic Impact Payment) and report the information shown there on your 2020 tax return. If indeed you were underpaid, you may be able to claim the rest of your EIP as a tax credit.
In addition, some EIP amounts were reduced because a taxpayer owes past-due child support, in which case the taxpayer should receive a letter from the Bureau of Fiscal Service explaining the EIP reduction. Unfortunately, these payment adjustments were not always correctly calculated or applied. The IRS is currently working to resolve the issue, so taxpayers affected by the processing errors do not need to take any action.
If the amount of your EIP was higher than you expected, you do not need to take any action at this time. Simply save your Notice 1444 and report the information on your 2020 tax return. Dependents who receive EIPs should hold the money pending further instructions, since those who are claimed as dependents on someone else’s tax return are generally not eligible for EIPs.