Tax filing status dictates stimulus payments

The $250 billion for direct payments to individuals and families that is part of the $2 trillion CARES Act economic relief package is only for U.S. residents with Social Security Numbers who meet income eligibility requirements, and excludes undocumented residents with Individual Taxpayer Identification Numbers rather than SSNs, as well as “mixed-status” married couples who, filing their taxes jointly for 2018 or 2019, reported an ITIN for either spouse.

The only exception written into the law is if at least one spouse served in the military during the filing year.

According to U.S. Rep. Filemon Vela’s office, however, it’s different for mixed-status married couples who filed separately instead of jointly. In such cases, a spouse with a SSN who meets other certain income requirements is still eligible for a so-called Economic Impact Payment (EIP) even if the other spouse has an ITIN rather than a SSN, according to Vela’s office. If 2019 returns haven’t been filed, the payments are based on 2018 returns.

Likewise, another provision of the CARES Act, which pays $500 for each qualifying, dependent child under 17 and with a SSN, excludes mixed-status married couples who filed jointly — but not those who filed separately, said Vela’s office, cautioning that the IRS rules are still in flux. Even though the IRS 1040 form requires mixed-status, separately filing married couples to report their spouse’s name and ITIN, it won’t bar the EIP or $500-per-child payment, according to his office.

The EIP is $1,200 for individuals or head-of-household filers with SSNs, or $2,400 for married couples with SSNs filing jointly, if not listed as dependents on another person’s tax return. The full amount will be paid to individuals with adjust gross income up to $75,000, or $112,500 for head-of-household filers, and $150,000 for married couples filing jointly.

A reduced EIP will be made to individuals making between $75,000 and $99,000 AGI if their filing status was single or married filing separately, between $112,500 and $136,000 for individuals filing as head of household, and between $150,000 and $198,000 for married couples who filed jointly. The amount of the payment in these cases will be based on taxpayers’ specific AGI.

On April 3, U.S. Rep. Lou Correa introduced the No Taxpayer Left Behind Act, co-sponsored by Vela, to expand CARES Act payments to ITIN holders as part of a fourth relief package currently being debated in Congress, arguing that their contributions to the economy are just as valuable as those of SSN holders.

Vela said the House Democratic version of the CARES Act bill would have extended the payments to ITIN holders but was shot down by the White House and Senate Republicans. It’s a matter of fairness, he said, since ITIN holders pay federal taxes too.

“We’re taking their taxes,” Vela said. “We ought to be willing to give them a cash payment. We’re going to do everything we can do to get it included, but with the Trump administration, and Republicans in charge of the Senate, it’s going to be difficult to get them to have a charge of heart.”

He said it also seems “extraordinarily punitive” to deny the child payments for children, even if they are U.S. citizens, because one parent has an ITIN.

“I don’t think we’re going to get anywhere with Republicans on getting the dollars to ITIN holders, but I’ve got to think that the payments to the kids is something that we could turn them around on,” Vela said. “All we can do is fight the fight.”

One thing he thinks can be resolved comes down to what seems to be a clerical error in the Senate’s version of the CARES Act — the fact that 17-year-olds were left out of the $500-per-child provision.

“The plan is to fix that in package four,” Vela said. “That’s what happens when you have a 1,000-page bill that you rush through in five days.”