What to know about your potential stimulus deal check

CBIZ MHM's National Tax Office's Bill Smith joins Yahoo Finance Live to discuss the $2 trillion stimulus bill and what the potential implications are for your payment.

Video Transcript

- I want to go to our retirement segment right now, brought to you by Fidelity, and bring in Bill Smith, managing director for CBIZ MHM's National Tax Office. So this is a wide-ranging bill. There's lots of implications in it for big business, small business, but also just for regular people. In terms of the implications for them, what's the most important thing that people need to know, if they hear about, oh, this $1,200 payment? Is there a tax implication there?

BILL SMITH: Well, there is a tax implication. And remember that, depending on what your level of adjusted gross income is, you may have your $1,200 or $2,400 payments phased out. So if you are at the $99,000 level and you don't have any kids and you're filing single, you're going to get your payment phased out, 198,000 for married, filing joint. Those amounts go up if you have qualifying children.

One of the things that may be a drafting glitch in the bill is that 17- and 18-year-olds may have gotten excluded unintentionally. So if you're eligible to be taken as a dependent on another person's return, even though the personal exemption amount is zero now, those dependent terms are still in the Internal Revenue Code, then you're not eligible. To be a qualifying child, you can't be 17. You have to be 16 or younger. So there is a donut hole, so to speak, for 17- and 18-year-olds. So that's one thing to pay attention to.

Otherwise, how is the money going to come out? We're not entirely sure, but it looks like they're going to do a process similar to the 2008 process. So if you haven't filed your 2019 return yet, they'll look at your 2018 return and see what your eligibility is. If you had an electronic deposit on that 2018 return, they'll put the money directly into your account.

If you filed your 2019 return already, they'll look at that. If they get it wrong-- let's say they're using 2018 information, and you've gotten divorced or there are differences in the child dependency that you have-- that's supposed to all be trued up, then, on your next tax return. So it will be a complex process, but they're trying to go, I think, for speed first, get as much money out as quickly as possible here.

- And then, Bill, an early headline out of all this was that the date to file would be delayed. So July 15th is now Tax Day in the US. And you outlined some of the issues there. I guess if you haven't filed 2019 yet, you're going to be working off 2018. I guess a question I'm sure you've gotten is, you know, should I be waiting until July 15th now to file my taxes, or should I push ahead, because it is a spring cleaning item for a lot of people, and I think people have more time at home now. But on the other hand, people have a lot less financial security than they had a couple weeks ago.

BILL SMITH: That's right. Well, I think the delay was intended to pump a little immediate money into the economy. Depending on how your savings are, I would counsel against spending all the money you were going to use to pay your taxes on April 15th, and not have it on July 15th if you don't have a source for getting those tax payments.

But otherwise, it is a benefit, and it's a benefit to the tax filing community because we can no longer meet with clients face-to-face. There's problems with getting paper, what to do with it, if it's coming into the offices and not going out. So this is helping us with our clients, our small clients, our small businesses make sure that we have the time to get the job done.

So if you have a refund due, file sooner. Absolutely. Don't wait. Get your money back as soon as you can. And they are processing all the electronic payments, all the electronic returns. So if you do a refund, now's a good time. But we did get the benefit of both the payment deadline and, finally, the filing deadline extended, but only for income tax returns, not for other types of returns, to July 15th.

- Bill Smith, managing director for CBIZ MHM's National Tax Office, have a great weekend, and thank you so much for your time.

BILL SMITH: Thank you, Jen, Myles.