Will I Have to Repay the U.S. Federal Government for My Stimulus Checks?

On the 12th of February, tax filing season is going to come. Several different Americans that have qualified for stimulus checks and those who have not received them have been gathering their paperwork to claim missing amounts from their federal tax returns. What if you might have been on the other end of this scale and then the IRS mistakenly sent you money as you wanted to leave honestly speaking. Is one required to return this, would these same rules get applied to a third stimulus check.

If you for payment for the stimulus that you were not supposed to get, you might have made more than the limit of income. If that is the case, then the IRS would honestly expect you to send the funds back. When the first stimulus checks round goes out through a year. The IRS has stated that in more cases, it might have accidentally sent these payments to people that were not truly eligible. This second round of checks might have been pushed out quickly. It could be possible that these same errors might have occurred again. These all depend on how quickly one got the stimulus payments. If one is checking using papers, or an EIP card, or by getting a direct deposit. There are several different ways one can go about getting these returned. 

Here there are more situations than one with which the IRS could want you to return a stimulus check that has been paid out in error. There are different specifics on how you could check these. It is very important to know if your stimulus check rights and there are key details about these stimulus taxes and checks. Here are the things that are happening using a potential third stimulus check. Here some lawmakers would want to target these payments. Also to know the amount of money which the new check would bring and how much of it can get approved. These stories have been updated recently. 

Several different situations would require you to return your payments to stimulus. 

Types of situations that you need to Return Your Stimulus Checks 

In this case, why did you get a stimulus check in the first place? Was there a pandemic? Did you get locked in your apartment with no way to go and hustle and make your money? Did you need to feed but there was no money to do so because of the conditions I mentioned above? 

If you suffered from all of these then you should know that after you have started getting your usual forms of income, or if the pandemic has started going away, or you are no more locked in your homes and normal life has resumed. You know for sure that you need to in peace return these stimulus checks back. Even if you weren’t asked for it, it is common decency. Believe that whatever goes around, comes around.

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What to Do if You Haven’t Received Your Stimulus Check Yet

The stimulus check refers to a certain amount of money approved by the presidential administration. There have been more stimulus checks due to the effect of the covid-19 pandemic on the economy as well as the people. These checks are necessary because unemployment rates are currently high. Stimulus checks include benefits and funds for Americans who may be struggling.

If you have not received your stimulus check yet here is what you should do. Before outlining the steps you should take, we need to discuss some of the reasons that may lead to you not receiving your stimulus check.

  1. Improper Application – To get the stimulus check you have to enter your information into the IRS Website. This is the only site that will require your information. Be wary of scams or fraudulent activities surrounding the stimulus check. If the information is not coming from the IRS then it is most likely not trustworthy.
  1. Taxes – A new ruling that permits those who haven’t filed their tax in 2018, 2019, and 2020 to still be eligible for the stimulus check however, the application of this ruling differs in states.
  1. Under 16 and 18 – If you are under 16 your parents or guardian should receive your stimulus check because you are under their care. This will only occur if they include your details in the information given to the IRS. For individuals under the age of 18, if your parents do not legally state that you are a “dependent” your family will not receive your stimulus check.
  1. Wage Limits – Not all wage earners will qualify to receive the full stimulus check and this is solely based on your tax returns. Individuals who earn less than $75,000 or $150,000 as a couple are eligible for the stimulus check. After this, for every $100 in income above the threshold will result in $5 being deducted from the stimulus check. If an individual earns $87,000 and above or a couple earns $174,000 they will not qualify for the stimulus check because they are high wage earners.

For heads of households (this has to be stated on tax returns), there will be no stimulus check if the gross income after adjustments is above $124,500.

  1. Recent Address Change – If an individual chooses to receive the check by mail and change addresses, it could take up to 5 months to arrive. This is why your information on the IRS Website should always be up to date.
  1. No Bank Account – Most stimulus checks are deposited directly into the bank account registered on the IRS Website. If you do not have one then you can get the check sent by mail which will take a few months to arrive. If you opt to receive it by cash through the app Cash App and a prepaid debit card.
  1. Immigrants without a Social Security Number – Immigrants without a social security number do not qualify to receive the stimulus check. Those with H-1B or H-2A visas and Green Cards are eligible.

If none of these apply to you and you still haven’t received your stimulus check, follow these steps.

  1. Track your payment status on the IRS Website through the Get My Payment.
  1. Ensure all the information registered is correct. You may have registered an incorrect bank account.
  1. Reach out to your bank to ascertain whether they are still processing your stimulus check.
  1. If you are getting a message stating “Payment Not Available” then you will have to state this in your tax returns (by the 15th of April 2021) to get your “Recovery Rebate Credit.” 

For more information on how to claim the rebate on your tax returns click here.

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‘Where Does the Unemployment Money Come From?’

Unemployment money or more accurately unemployment benefits/unemployment payment/unemployment insurance/unemployment compensation is routinely scheduled payments given to unemployed people by authorized bodies such as governments.  If you’ve ever wondered where does the unemployment money come from, then this is the article for you.

In the United States of America, unemployment money comes from several places. It comes from a compulsory insurance system that is financed through a partnership between the federal and state governments. The Federal Unemployment Tax Act (FUTA) tax which demands that 6 percent of the first $7,000 of protected workers’ earnings is one of the sources of unemployment benefits. It is also financed by the federal fund, unemployment insurance taxes that differ from state to state, and general payroll taxes.

The first instance of unemployment money can be traced to the National Insurance Act of 1911 in the United Kingdom. It was introduced by H. H. Asquith of the Liberal party government. They introduced it to counter the rapidly growing popularity of the Labour Party among the United Kingdom’s working-class population. When it was first introduced, the opportunity was only available to people who were already earning wages during illness and unemployment. Those who did not already earn wages did not qualify for unemployment benefits. In the UK, the idea of unemployment benefits had mixed reactions. Communists argued that it would divide and prevent the working class from starting revolutions while others agreed that although it had many disadvantages, it was necessary. The unemployment benefits scheme was first funded through the collection of a fixed amount from taxpayers, employers, and their workers. When it was first introduced, the benefits were restricted to more dangerous industries such as shipbuilding. If a worker was unemployed for more than one week, the worker could apply to receive 7 shillings a week for up to fifteen weeks uninterrupted.

In the United States, unemployment benefits are available in all 50 states, the District of Columbia, the United States Virgin Islands, and Puerto Rico. The eligibility requirements and payments vary from state to state. However, eligible workers can get as much as $783 in Massachusetts per week and as low as $235 in Mississippi. To be eligible for unemployment money, you have to meet the requirements of your state. As earlier stated, they vary; however, there are general rules set in place. They are:

  1. If you quit your job voluntarily you may not be eligible for unemployment benefits.
  1. If you were fired from your job due to misconduct, then you may not be eligible for unemployment benefits. Misconduct in this case applies to actions happening inside and outside your place of work.
  1. To be eligible for unemployment benefits you must be temporarily unemployed and your unemployment must not be as a result of your actions.

In the US, there is no waiting period. Some countries have a waiting period of up to seven days; however, the United States doesn’t have one. The rates of participation are very different in states; however, estimates have shown that less than 30% of Americans who are unemployed (who are also still searching for work) receive unemployment benefits. In the 72 countries that offer unemployment money, there is something called a PBD. PBD means potential benefit duration, and it is the maximum amount of time eligible people can consistently receive unemployment benefits. In the United States, the PBD is six months.

We hope this article has answered your question on where the unemployment money comes from and more.

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What President Trump’s Payroll Tax Holiday Means to Your 2020 Tax Refund

On the 8th of August 2020, President Trump signed an executive memorandum that directed the Treasury Secretary to commence a payroll tax holiday. The title being used in headlines is quite misleading because it is not a holiday but rather a deferral. The actual title of the memorandum makes this clear. The memorandum is titled “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster.”  Just like the stimulus check, the payroll tax deferral is a way to ease the economic effects of the global pandemic on the workers. Even though unemployment has dropped to 8.4%, it is nowhere near the 3.5% of February. With that being said let’s get into the details of the payroll tax holiday.

The payroll tax deferral only applies to Americans making less than $104,000 a year, and it deferred four months of taxes (September-December 2020) to January-April 2021. This is just as stressful as it sounds. The tax holiday simply means you’re going to have to pay double the amount from January to April 2021. This means the social security tax percentage will go from 6.2% to 12.4%. The payroll tax holiday is essentially a zero-interest loan (without accounting for inflation).

This memorandum has drawn a lot of criticism because although the President signed it, there are no laws or guidelines that stop employers from continuing to deduct tax from the employees. Employers argue that they would still have to pay said amount even if the employee quits before January 2021. It is also important to note that for most low-wage workers, the tax holiday holds less appeal in the face of the looming payment dates in 2021. Many people would prefer the payroll taxes continue to be removed regularly as opposed to having double the amount removed in the first four months of 2021.

Even though the memorandum directed the Treasury Secretary to explore ways to forgive the taxes of the tax deferral, there have been no bills or legislation to support or discuss this. The memorandum still clearly states that deferred taxes must be paid:

“An Affected Taxpayer must withhold and pay the total Applicable Taxes that the Affected Taxpayer deferred under this notice ratably from wages and compensation paid between January 1, 2021, and April 30, 2021, or interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid Applicable Taxes.”

Now you may be wondering what the payroll tax holiday means for your 2020 tax refund. Well, we’re not too sure what’s going to happen. The IRS usually starts accepting tax refund forms by February, and the deferred payroll tax will be paid from January to April.

There is a chance your tax refunds may be lower if you file early. The details aren’t clear yet because the IRS has not released a statement addressing this. We can only assume that tax refunds will be affected by the payroll tax holiday. Perhaps the deferred tax payroll payments will result in a higher 2022 tax refund.

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