IRS changes how Social Security recipients get coronavirus stimulus money — again
Questions about the $2 trillion coronavirus stimulus package have arisen since President Donald Trump signed it into law last week.
How the 64 million Americans on Social Security will get their money is chief among them.
After some back and forth between policy analysts, lawmakers and the Internal Revenue Service, here’s where the federal government landed: People who receive Social Security payments do not need to file any type of tax return — “simple” or otherwise — to receive a stimulus payment.
“It’s automatic,” the IRS clarified in a tweet Wednesday night.
Where it started
Congress passed the CARES Act last week to induce spending during a possible economic downturn caused by the coronavirus pandemic.
Under the act, adults who earn less than $75,000 a year are slated to receive $1,200 (or $2,400 for married couples), plus an additional $500 for qualifying dependents. Retirees who get Social Security payments are included in the package.
The Treasury plans to use direct deposit information pulled from individuals’ 2018 or 2019 taxes to transfer the stimulus money.
Social Security recipients don’t always file tax returns, but Congress gave them an out in the CARES Act: The government could use their Social Security benefit statement, also known as the SSA-1099 form, to send the money.
“The knowledge that they didn’t have to do anything further for benefits provided a sense of relief for seniors,” Forbes reported.
Then the IRS released its first set of guidelines on the stimulus payments — and it contradicted that.
In a section titled “I am not typically required to file a tax return. Can I still receive my payment?,” the IRS said yes, but only if they filed what’s known as a simple tax return.
In response, the Washington Post reported 34 senators sent the White House a letter questioning “why the Trump administration is placing this ‘significant burden’ on senior citizens and the disabled.”
More than 15 million Social Security recipients with low income don’t file taxes, the Post reported, and about 3.5 million were left out of the last round of stimulus checks during the 2008 recession because they didn’t send a return.
Chye-Ching Huang, senior director for economic policy at the Center on Budget and Policy Priorities, told Forbes the CARES Act was written in a way to avoid those exclusions — it explicitly allows the Treasury “to issue checks based on information available from the Social Security Administration.”
Reversing course
The IRS and the Treasury ceded to the chorus of concerns on Wednesday.
In a news release, the Treasury scrapped its previous instructions and announced it would — as the CARES Act intended — rely on the Form SSA-1099 and Form RRB-1099 to generate stimulus payments.
“Social Security recipients who are not typically required to file a tax return do not need to take an action, and will receive their payment directly to their bank account,” Treasury Secretary Steven T. Mnuchin said in a news release clarifying the change.
The IRS also updated its guidelines.
Under the current wording, senior citizens, Social Security recipients and railroad retirees who don’t have to file tax returns will still receive stimulus payments for $1,200 per person. They won’t, however, get additional funds for dependents.
This story was originally published April 2, 2020 at 11:57 AM with the headline "IRS changes how Social Security recipients get coronavirus stimulus money — again."
