Many Americans may soon get checks from the government. But “uncle Sam” may also return part of the money, according to CNBC.
Information about how much to pay for these checks and whether people pay their taxes, most likely, will very soon become known.
Thursday, March 19, the majority leader in the Senate Mitch McConnell. Unveiled a bill proposing to allocate $1200 for individuals, $2400 for married couples and $500 for each child.
These payments will gradually decrease to individuals who have declared an income of $75 thousand or more, or $150 thousand for married couples who file the income tax return jointly, according to their tax return in 2018.
Currently, the proposal of the government is actually providing money as loan from your taxes.
“So these payments are not taxed, because in fact it is your own money,” said Jeffrey Levin, the Director of perspective planning in Buckingham Strategic Wealth on long island, new York.
There are three points, according to the proposal McConnell, to determine the amount of payments.
If your individual tax liability is from $600 to $1200, you get the amount of tax liability.
If it is below $600, you get $600 dollars.
And if it exceeds $1200, from the payment limit of $1200.
These amounts are doubled for married couples.
Keep in mind that the proposal was not finalized and may be changed by agreement with the legislators.
The amount offered by McConnell, different from those discussed by the Minister of Finance Steve Mnuchin. On Thursday, Mnuchin confirmed that the tramp wants to send $1000 to each adult American $500 each child.
“This is an unprecedented situation, when for obvious reasons the government instructed to suspend large-scale production, so we can win this fight the virus 2019-nCoV” he said in the speech.
“It is affecting hard-working Americans, and the President is determined to support them,” he added.
Package worth $1 trillion, which is planning to provide the Republicans the White house and the Senate, will give each adult American a check for $1,000 plus another $500 for each child. For example, a family with two parents and two children will receive $3000.
“As soon as Congress will, in three weeks, we will receive those checks, and then if after six weeks, there will still be a state of emergency in the country, we will pay another $3000,” said Mnuchin.
Earlier this week, Mnuchin aims to begin payments within two weeks. This part will be half of the total expenditure on the allocated amount.
Another $300 billion of this amount will be used to assist companies in maintaining the level of wages and for the forgiveness of loans to those who begin to work after the crisis.
In the first two weeks of March unemployment figures have grown by approximately 33%.
The last $200 billion will be aimed at ensuring lending to airlines and other critical industries that were severely affected by the pandemic.
There are several possible scenarios of how taxation can be applied or not be applied to any received payments.
An advance on a future return
The government can make so that this money will be deducted from the tax refund for the year 2020, said Margie Dunn, registered agent at Compass Tax & Financial Services in Monterey, California.
For example, say you are alone and now you receive a check for $1000. Next year, if you should receive a refund in the amount of $3000 , the government will deduct the $1000 and will give you the net difference in the amount of $2000 as compensation for the year 2020.
A gift from the government
Alternatively, the government may consider the checks which probably means that they will be considered taxable income.
People in this case will have to pay tax on the money based on their specific tax group.
“People who typically earn from $50 000 to $150 000, they are the ones who will be really uncomfortable if they have to pay the tax,” said Dunn.
If she was given the choice between upfront taxes 2020 or the payment of tax for financial aid, Dunn said she would prefer the tax money.
This is because taxpayers with low incomes will benefit more. If it’s an advance, you will probably have to return the money, no matter what she said.
The money is not taxable
The last alternative — the money can be tax-exempt. Experts doubt that this is possible.
“Overall, I think that there will be no tax implications if the government will make payment in the form of withholding of Federal tax,” said Barry picker, certified public accountant and certified financial planner at Picker & Auerbach Cedarhurst, new York.
“I guess that the tax would not be taxed, at least for those with low incomes,” said Thomas Neuhoff, tax inspector at Henry & Peters, PC, with offices in Tyler and Longview, Texas.
Dunne said that in accordance with the tax code of the United States, all you get is considered income unless it is exempt from taxation. But there are exceptions for gifts which are defined as something for which you expect nothing in return.
“Otherwise, technically, if you find on the ground is $20, believe it or not, you should report it as income. People, of course, don’t do that, but it’s there in the Tax code”. said Dunne.
As reported ForumDaily:
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