Due to the current global economic crisis, the U.S. government is preparing to send out direct payments to help individuals amid the coronavirus pandemic. 

As of now, individuals have been granted up to $1,200 and couples will receive up to double that amount, including an additional $500 for every child under their care. However, for individuals with an adjusted gross income of more than $75,000, the amount will be reduced by $5 for every additional $100 of their adjusted gross income. Those earning more than $99,999 will not receive any cash stimulus. For couples, the income threshold doubles. 

Citizens who have already filed their direct deposit information to the Internal Revenue Service (IRS) will be the first to receive the stimulus package, which should be sent out by the end of this month. Unfortunately for everyone else, it remains unclear when they will receive their payments. Experts predict it may take weeks or even months. 

Thus, the IRS urges people to file either their 2019 or 2018 tax returns in order for the IRS to begin calculating the payments immediately. 

On Sunday, Treasury Secretary Steven Mnuchin announced plans about a web-based app for those who have yet to file or register their payment details. The purpose of the app is to provide information on the necessary steps an individual must take in order to receive their stimulus payment. 

Mobile payments services such as Venmo have also offered to help during this difficult time, though it may prove challenging to employ a new, more advanced system of transferring money. Previous stimulus payments in 2001 and 2008 were delivered through direct deposit and checks in the mail alone. 

How it will work:
For those who have already authorized a direct deposit, the IRS ensures that their stimulus payments will be automatically deposited into their banking account. The taxpayer will not need to take any action. 

This plan should cover a majority of people considering that an estimated 92 million people received funds through a direct deposit in the previous year. That number can be interpreted as 82% of people who received refunds, making up 60% of all tax filers. 

“I think it’s reasonable to think those payments can be made in three weeks,” said Nicole Kaeding, an economist with the National Taxpayers Union Foundation.

Who will have to take action:
Those who have not filed a return for either 2019 or 2018 should consider doing so now if they wish to receive any cash stimulus. This is especially true for those who, under normal circumstances, are not required to file for tax returns, such as those who earn less than $12,200 and couples who earn less than $24,000. 

The IRS assures that they will provide further guidance on how to file a return as it is understandable that language on tax forms can be confusing and unclear. While there are IRS centers across the country that offer in-person taxpayer assistance, they have all been temporarily shut down due to the pandemic. 

“An area of big concern is how much administrative burden we’re putting on individuals to get these payments. We should be limiting it as much as possible,” said Kyle Pomerleau, who studies federal tax policy at the American Enterprise Institute.

How checks will be delivered:
This is where the information gets a little unclear for those who have not authorized a direct deposit from the IRS. Generally, it takes much longer for payments to be sent physically as opposed to direct deposits into one’s bank account. 

This was true for the 2008 stimulus package as direct deposits were sent within a three-week period while paper checks were sent through the mail, taking a 10-week period. 

Because of this, the legislation has given the IRS has until the end of 2020 to transfer all payments. 

A potential online solution:
As mentioned before, the Treasury is currently developing a web-based portal that will allow people to provide their banking information online. This way, the IRS will be able to immediately send out stimulus packages for all those in need. However, the government has yet to give any details on their progress, or on whether this portal will be implemented at all. 

One main disadvantage is that an online portal wouldn’t be useful to the millions of Americans who don’t have access to the Internet. It is also likely that the portal will have an authentication process, which may be a challenge for some.

To put it into perspective, only 30% of people who do register for an online account with the IRS are successful, according to former IRS Taxpayer Advocate Nina Olson. This is because the authentication test requires an account number of a mortgage, loan or credit card, and a mobile phone with the same address as your return. Those who aren’t able to check all the boxes are ineligible to receive an account altogether.

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