If you’re a Social Security beneficiary 2020, here’s some information you’ll be glad to hear. The nation’s (circa) 63 million (2019) Social Security beneficiaries could be eligible for a raise in their checks this year — but not for conventional reasons.
Social Security Beneficiary 2020
The rise in Social Security benefits this year has arisen from the turbulent economic situation caused by the COVID-19 pandemic.
In response to social distancing rules necessitating a nationwide lockdown, the federal government reacted to support individuals and the economy.
The Coronavirus Aid Relief and Economic Security Act or CARES Act passed Congress on 27th March 2020.
It provides a $1,200 one-off payment for qualified individuals. ($2,400 for joint filers and $500 for each dependent child over 16).
As a Social Security beneficiary 2020, to be eligible, individuals must have incomes below $75,000 for single filers and $150,000 for married couples.
Anyone on higher incomes may still qualify but at a reduced amount. These payments are possible up to $99,000 in adjusted gross income (AGI) for single filers. AGI of $198,000 for couples filing jointly and AGI of $136,500 for head-of-household.
Initially, the IRS said that everyone must file a tax return to get a stimulus payment. However, this was criticized because many Americans, including Social Security recipients, would find it hard to claim.
The reason for this is because over 15 million Social Security beneficiaries do not file a tax return each year. After all, their income is under the threshold.
Around 35% of U.S. retirees rely solely on their Social Security benefits as their income. If benefits are below $25,000, and tax-liability free, there is no need to file a tax return.
However, on 1st April, the IRS reversed their decision and said that Social Security recipients would receive automatic stimulus payments.
The IRS would use data from the Social Security Administration (or Railroad Retirement Board) to create a payment to beneficiaries if they didn’t file a tax return in 2018 or 2019.
Specifically, data is obtained from Social Security 1099 (SSA-1099 or RRB-1099) tax forms.
It was thought, at one point, that entitled Social Security beneficiaries would have to use the Inland Revenue Service’s “Non-Filers: Enter Your Payment Info Here” tool if they hadn’t filed a tax return for 2018 or 2019.
Anyone claiming as a dependent on someone else’s tax return will not be eligible to receive a stimulus payment.
The Social Security raise equates to around 7%, based on a $1,387 monthly take-home income.
The Social Security Administration announced in March that the $1,200 benefit payment would net beneficiaries closer to $17,850 this year, rather than $16,650.
This works out to the average beneficiary at a 7.2% annual raise for 2020.
The cost-of-living adjustment (COLA) for 2020 rose by 1.6% and 2.8% in 2019.
As the coronavirus pandemic has lowered inflation rates, COLA is unlikely to take effect for 2021.
The anticipated October announcement from the Social Security Administration for next year’s adjustment is not likely to increase the beneficiary’s income because inflation has dropped.
Social Security Beneficiary 2020 Payment
The IRS can direct deposit an up-to-$1,200 stimulus check to the same bank account that Social Security beneficiaries monthly benefit posts to.
However it gets paid your automated benefit payment will usually arrive in the same way that you get your current Social Security benefits.
For example, if Social Security benefits are directly deposited into your bank account, then the stimulus payment will be electronically paid there as well. If you usually receive your benefits in the mail, then you’ll also receive a paper stimulus check.
These “Economic Impact Payments,” as they’re officially known, have already started going out to beneficiaries.
What Other Benefits Could We See?
For retired seniors living on Social Security and retirement investments, the stimulus checks will mean extra welcome money for those that need it.
Other important provisions from the CARES Act relate to the suspension of required minimum distributions (RMDs).
As a Social Security beneficiary 2020, you may see more stimulus payments this year. The Emergency Money for the People Act or EMPA would see eligible Americans receive a $2,000 payment each month. How this equates to retirees is yet to be known.
Are you a Social Security beneficiary 2020? What do you think about the stimulus payment? Please comment below.