This spring, millions of Americans automatically received Economic Impact Payments (EIP) to help relieve the hardships caused by the coronavirus public health emergency. Taxpayers who had filed taxes in 2018 or 2019 received their payments automatically either through direct deposit or a check in the mail. An estimated 25,000 Montanans, however, live in households who are not required to file taxes due to their low incomes. These individuals are those at most at risk of not receiving their payments. To receive their share, non-filers must fill out this form on the IRS website by October 15.
The EIP payments are significant - $1,200 per eligible adult, and $500 for each eligible child. This means a two parent, two child household that qualify for $3,400. With high unemployment and skyrocketing food insecurity, these relief payments are an important tool in helping Montanans weather this crisis.
Non-filers are mostly households with extremely low incomes – individuals with incomes less than $12,400, heads of households with incomes less than $18,650, and married couples with incomes less than $24,800 - are not required to file federal taxes. Ensuring that households with very low incomes receive payments is a vital as coronavirus case numbers begin to climb again in Montana.
Let’s put the impact of these funds in perspective. Average fair market rent for a four-bedroom house in Montana is $1,453. It takes a family working 129 hours a week a minimum wage to afford it. So the $3,400 in EIP would be enough to cover rent, groceries, gas, electricity, water, and the unexpected bill or expense. For families struggling to get by, this would be a welcome lifeline.
Not only do the payments help reduce hardship for Montana households, they can also give the state and local economies a much-needed boost. In Montana, the amount of potential total payments to households who did not receive automatic payments totals $25 million. Stimulus payments to non-filing households are one of the most important means of economic recovery. Direct payments to very low-income people have been shown to be one of the most effective ways to stimulate the economy during a recession.
Economic Impact Payments were established through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. These payments, coupled with other provisions in the CARES Act, kept 12 to 16 million people nationwide out of poverty during the initial months of the pandemic.
United States citizens, permanent residents, and qualifying resident aliens who have a valid Social Security number and have not been claimed as a dependent of another taxpayer are eligible to receive payments. Several groups are excluded from payments, including immigrant families if one spouse lacks a Social Security number (and the couple filed taxes jointly), 17-year-olds, college students whom their parents can claim as dependents, and adult dependents. Payments also begin to phase out at a certain income level ($150,000 for married couples), however, non-filers generally live on low incomes and are eligible for the full amount.
Local non-profits, health service providers, faith-based organizations, and government agencies can help ensure that all Montanans receive their payments by sharing the non-filer payment tool with all those who may potentially need it. For those with limited internet access or who have difficulty navigating the form, these service providers and community organizations are an essential part of making sure all Montanans receive their payments.
Individuals have several ways they may receive their relief payments, including a paper check or direct deposit into a bank account. For those who are unbanked, they may receive payments via a financial payment app (Venmo, PayPal, or CashApp), or a prepaid debit card.
Those who do not file a form to by October 15th may still file a 2020 tax return to receive the payment in 2021.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.