Where’s My Stimulus Check?

The IRS sent out the first wave of stimulus payments this  past week to around 80 million Americans. In order to speed up the process, the IRS has prioritized sending payments to Americans that have previously submitted their direct deposit information with the agency. Those that have not authorized a direct deposit account with the IRS will receive their stimulus payment in paper check form. However, the IRS estimates that it only has the capacity to mail out 5 million checks a week, so many Americans will not receive their payment until likely August or later.

Based on the income level eligibility requirements, at least 90{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of Americans should qualify for at least some amount of stimulus payment. If you think you should have received your stimulus payment by now, here are several reasons why the IRS has delayed your payment.

Social Security Recipients

For recipients of Social Security and Supplemental Security Income (SSI), the IRS has announced that payments will appear alongside normal monthly benefits. Recipients are not required to file a tax return to receive payment and will receive their stimulus payment in the same format (direct deposit or paper check) of their normally received benefits.

Direct Deposit Not Authorized

Even if you filed your tax return electronically the last two years, the IRS may still not have direct deposit information saved for you. The IRS has only saved direct deposit information for those that have received a federal refund in 2018 and/or 2019. If you owed the IRS in either of those years, your direct deposit information may no longer be stored. The IRS is not using bank account information it used to withdraw from your account if you owed money. To check if you need to submit your direct deposit information, the IRS has set up a web portal for entering that information and checking on the status of your payment.

Change of Filing Status or Bank Account Information

Even if you received a refund and filed electronically, a change of filing status or a change in your direct deposit account could also delay your stimulus payment. For example, if you got married in 2019 and filed married jointly for the first time, or got divorced in 2019, and filed single for the first time in a while, the IRS may no longer have accurate direct deposit information on record. Similarly, if you changed banks or switched account numbers, the IRS will no longer have correct direct deposit information for you. Using the IRS Get My Payment Portal can verify if the IRS needs updated banking information.

Current Return Still Processing

Though the IRS extended filing of individual federal returns until July 15, 2020, many Americans still made efforts to file their 2019 returns in line with the normal April 15 due date. Due to the shutdown, the IRS has prioritized processing stimulus payments for Americans and has largely slowed down return processing for the next few weeks. Many service centers across the country have also closed entirely. If the IRS has receipt of your 2019 return but has not processed it yet, this may also delay your stimulus payment.

Non-filers

Millions of lower-income Americans who do not normally meet the income thresholds required for filing will need to also contact the IRS. Through use of a separate web portal entitled Non-Filers: Enter Payment Info Here, non-filers will need to confirm their identities and provide bank account information or address information to receive a stimulus payment.

Watch for Fraud

Remember that the IRS will never call you, email you, or otherwise contact you directly for your sensitive personal information. The IRS web portals will require you to enter information such as your social security number, your routing and bank account numbers, and other personal information. Otherwise this information should not be shared through any other method.

Nicholas Rogers - Attorney

Nicholas D. Rogers joins SYK Estate Planning and Taxation practice with a passion for helping individuals, small business and nonprofits. His practice includes a focus on estate planning, federal and state tax controversy, business formation and planning, as well as trust and estate administration.

How to Prepare for Bankruptcy

This sudden economic downturn will cause a large number of individuals and corporate entity debtors to consider bankruptcy in order to get a better handle on their financial situation. While many associate declaring bankruptcy as an admission of failure or destitution, bankruptcy can actually offer debtors a path toward recovering from a devastating financial situation. When considering whether bankruptcy is the right option for your situation, it is essential to have a basic understanding of how bankruptcy works and the initial actions you should take should you need to proceed with bankruptcy.

Understand the Different Types of Bankruptcy

The different types of bankruptcy are referred to as “Chapters”, and likely only one form will apply to a specific situation.

  • Chapter 7 Liquidation
    • The simplest and most common bankruptcy, a “straight bankruptcy”.
    • Individuals and most corporate entity debtors can qualify for Chapter 7.
    • Debtors are not required to submit to a repayment plan, but it does require liquidation of all nonexempt assets to payback creditors.
  • Chapter 11 Reorganization
    • Form of bankruptcy for both individuals and corporate entity debtors.
    • Rather than liquidation, the debtor submits a reorganization plan that explains how it will be able to repay creditors over a period of time.
  • Chapter 13 Debt Adjustment
    • Form of bankruptcy for individual debtors only.
    • The individual debtor must have a certain level of income to qualify.
    • Rather than liquidating all assets, it allows the debtor to protect certain property and have enough time to pay off your debts within a monthly payment plan.

There are other much less common chapters of bankruptcy, but 7, 11 and 13 are the most utilized.

To properly prepare for bankruptcy, there are also a number of steps we recommend.

Gather Financial Statements

Regardless of the form of bankruptcy applicable to the situation, the first step requires getting financial statements in order. Order copies of all banking and financial account statements, obtain past filed federal and state tax returns, and figure out your income level from pay stubs, Form W-2 and Form 1099 and more. Depending on the amount of disposable income available, a debtor may or may not qualify for different chapters of bankruptcy.

Prepare an Asset List

Bankruptcy also requires a list of all assets and property owned. This does not mean listing out every piece of furniture or article of clothing, but rather a list of every significant asset that has actual value. Real property, bank accounts, investment accounts, retirement accounts, vehicles, luxury items all need inclusion on an asset list.

Get Current with Taxes

Debtors not current with their federal and state taxes will often encounter great difficulties in qualifying for bankruptcy. Tax returns determine past and current earning and asset holdings, and inform the IRS whether a debtor owes any additional taxes beyond W-2 withholding or past payments made. Any tax owed on returns not yet filed is also not dischargeable in bankruptcy.

Prepare a List of Creditors

Bankruptcy requires a debtor’s complete disclosure of all debts not only to the court, but also to all creditors. Any creditor left out will not be included in the bankruptcy, which could cause massive complications for a debtor thinking it will get a clean slate. Ordering a credit report from one of the three major credit agencies is a good way to confirm that no creditor is left off the list. The creditor list needs to include all secured, unsecured, and priority unsecured creditors. If you owe back taxes, the IRS is also considered a creditor.

Avoid Fraudulent Transfers

In the period leading up to a bankruptcy, a debtor’s actions and transfers will receive heavy scrutiny from both the court and creditors. If one attempts to sell, transfer or hide assets before a bankruptcy, the court may block the discharge of any debts and the debtor may even be subjected to criminal penalties. Payments in the ordinary course of business are permitted, and transfers or sales made in furtherance of paying debts and expenses are also allowed, but may require additional explanation and verification from the court and creditors. Also avoid preferential transfers to family member debts as those will also be potentially considered fraudulent transfers.

Retain Qualified Counsel

Navigating the complex bankruptcy laws also requires having effective legal representation. Our team of experts at SYK can help you make the right decisions and provide the advice you need in the event of bankruptcy.

 

Nicholas Rogers - Attorney

Nicholas D. Rogers joins SYK Estate Planning and Taxation practice with a passion for helping individuals, small business and nonprofits. His practice includes a focus on estate planning, federal and state tax controversy, business formation and planning, as well as trust and estate administration.