5 tax moves to make this abnormal April
COVID payments are on the way. So are related tax scams

Treasury relents, will send COVID-19 payments automatically to eligible senior citizens

Social security paper check
Treasury backtracks and now says Social Security recipients who qualify for the COVID-19 payments will get the money without having to file a tax return.

Never underestimate the power of the older population.

The U.S. government learned that lesson this week, when the Treasury Department announced, contrary to its prior assurances (and a new law), that folks on Social Security would have to file a tax return if they wanted to get their share of the coronavirus relief payments.

Last night, Treasury Secretary Steve Mnuchin reversed that requirement. (Yes, on April 1. No, it was no an April Fool's Day joke.)

Now older Americans who are eligible for the COVID-19 money won't have to submit a tax return.

"Social Security recipients who are not typically required to file a tax return do not to need take an action, and will receive their payment directly to their bank account," said Secretary Steven T. Mnuchin.

They'll just have to wait, like most of the rest of the other recipients across the United States, for the payments.

Mandated payment process: The payments of up to $1,200 for single taxpayers, $2,400 for married couples who file jointly, plus $500 for each dependent child who is younger than 17 are part of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Shortly after the legislation was signed into law on March 27, Treasury and the Internal Revenue Service, which is in charge of delivering the checks, indicated that it would work with other agencies who provide federal to millions of Americans to get checks to those who qualify, but who do not usually file tax returns.

That requirement actually is part of the CARES Act.

Under the law's section addressing the "Timing and Manner of Payments," specifically regarding their delivery, it says:

"if the individual has not filed a tax return for such individual’s first taxable year beginning in 2018, use information with respect to such individual for calendar year 2019 provided in — [either] Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement."

But when Treasury and the IRS issued a statement on March 30 to answer questions about how and when folks would get a COVID-19 payment, the agencies said they would require a tax returns from everyone in order to issue the payments.

The statement added that instructions on how to file a "simple return" to get the payments would "soon" be posted on the IRS' special Coronavirus Tax Relief web page.

Immediate outcry: Reaction to that announcement also was soon. In fact, it was immediate and harsh.

Filing a tax return is difficult for many filers, regardless of age, but it can especially daunting for many older folks. Many senior citizens no longer file 1040s because they don't make enough to meet federal filing requirements or rely solely on Social Security benefits, which in these situations are untaxed. Asking them to take this special step now, even using the special 1040 for older filers, is problematic at best.

I know this from personal experience.

Back in 2008, the George W. Bush administration issued rebate checks in the wake of the 2008 subprime mortgage meltdown and subsequent recession. Senior citizens were eligible for those payments, too. They also were required 12 years ago to file a tax return, even if they didn't normally have to do so, to get that money.

I helped my mom, who relied solely on Social Security and hadn't filed a tax return for decades, send in a 1040 back then so she could get her money back then. Others apparently didn't have such help.

Mum and Willie at our house Thanksgiving
My mother and my furry little brother Willie having a conversation a few years ago. Back in 2008, she had to submit a tax return to get a federal rebate. I was able to help her do that. Other seniors weren't so lucky. (Photo by Kay Bell)

A 2008 Treasury Inspector General for Tax Administration analysis of those Bush 43 rebates found that 3.5 million Social Security recipients didn't get those government checks for which they were eligible.

Even when special help, like that offered by neighborhood Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs, there are issues. In normal times, many taxpayers have physical disabilities or face transportation obstacles that hamper their efforts to get that free tax filing help.

Now times are decidedly abnormal. VITA and TCE sites across the United States are closed due to coronavirus social distancing and stay-at-home orders. It's unclear when, or if, they will reopen by the July 15 filing deadline.

Chorus of complaints = Treasury reversal: These were among the points were made in a letter sent April 1 by 41 Democratic Senators to Mnuchin and the Social Security Administration:

"To ensure that these vulnerable individuals automatically receive stimulus payments, the CARES Act explicitly provides the Treasury Department with the authority to provide payments to seniors receiving Social Security retirement benefits and to individuals receiving Social Security disability benefits, even if these individuals do not file tax returns.

Unfortunately, on March 30, the IRS published guidance indicating that the agency may require recipients of Social Security retirement and disability benefits to file 2019 tax returns to receive stimulus payments. This filing requirement would place a significant burden on retired seniors and individuals who experience disabilities, especially given the current unavailability of tax filing assistance from Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs during the COVID-19 crisis."

Eldercare advocates, mass and social media, including some GOP lawmakers on Twitter, also joined the chorus of complaints about the unexpected filing requirement.

The Treasury Department reversal came a few hours later.

The announcement's title cut right to the chase: Social Security Recipients Will Automatically Receive Economic Impact Payments.

Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive the COVID-19 payment, Mnuchin said. "Instead, payments will be automatically deposited into their bank accounts."

To accomplish that automatic delivery, the IRS will use, as the CARES Act requires, the information on these individuals' SSA-1099 and RRB-1099 forms. They will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits, said the Treasury Secretary.


Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.

But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.


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Kay Bell

These are 1099s from government retirement programs, specifically Social Security and Railroad Retirement, where most recipients of the monthly benefits get that money directly deposited. The IRS also regularly works with these agencies, so the sharing of the info is expected to be relatively easy.

Drew Schwartz

1099 forms do not have direct deposit information on them so how is the IRS going to get that information from SSA??

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