While the third round of Economic Impact Payments continue to be made automatically to most people, the IRS can’t issue a payment to eligible Americans when information about them isn’t available in the tax agency’s systems.
Economic Impact Payments, also known as stimulus payments, are different from most other tax benefits.
People don’t need a permanent address, a bank account or even a job to get these payments. Individuals may qualify for this money if they have a Social Security number and are not being supported by someone else who can claim them as a dependent.
Eligible people who haven’t received these payments should file a 2020 tax return, even if they don’t usually file. This will give the IRS information needed to send them a payment. Those experiencing homelessness may list the address of a friend, relative or trusted service provider, such as a shelter, drop-in day center or transitional housing program, on their tax return.
Those who missed either of the first two payments can still get this money by filing a 2020 tax return and claiming the recovery rebate credit. Filing a 2020 tax return is the only way, eligible people can receive the money from the first or second payments now. Most people can use IRS Free File to provide very basic information. There’s even a special section on IRS.gov that can help: Claiming the 2020 recovery rebate credit if you aren’t required to file a tax return.
The credit will be included in the filer’s tax refund. The IRS will send any third EIP amount they are eligible for separately after their return has been processed. Using IRS Free File to file a tax return and choosing direct deposit is the quickest and safest way to get a refund.
The American Rescue Plan expands EITC and the child tax credit benefits for the 2021 tax year. Some people will be able to get advance payments of the child tax credit later this year. There is nothing those who qualify need to do at this point other than file a 2020 tax return.
Options for those without a bank account People who don’t have a bank account should visit the Federal Deposit Insurance Corporation website for details on opening an account online or use the FDIC’s BankFind tool to locate an FDIC-insured bank.
BankOn, American Bankers Association, Independent Community Bankers of America, National Credit Union Administration have lists of banks and credit unions that can open an account online. Veterans, can visit the Veterans Benefits Banking Program for financial services at participating banks.
Many reloadable prepaid cards or mobile payment apps also have account and routing numbers that individuals can provide to the IRS to get their payments.
Individuals experiencing homelessness can also receive the EITC For people experiencing homelessness who have a job, filing a tax return often carries a bonus — getting a refund based on various tax benefits, especially the earned income tax credit for low-and moderate-income workers and working families.
To get the credit, federal law requires that a worker live in the U.S. for more than half of the year and meet other requirements. This means living in a home in any of the 50 states or the District of Columbia. Therefore, individuals experiencing homelessness, including those who stay at one or more homeless shelters, can meet that requirement.
Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, no tax, or even get a tax refund. The amount varies depending on the worker’s income, marital status, and other factors.
To find out if they’re eligible, people can use the EITC Assistant on IRS.gov. It’s available in both English and Spanish.
Tag: bank account
WASHINGTON – The Internal Revenue Service reminds taxpayers to avoid “ghost” tax return preparers whose refusal to sign returns can cause a frightening array of problems. It is important to file a valid, accurate tax return because the taxpayer is ultimately responsible for it.
Ghost preparers get their scary name because they don’t sign tax returns they prepare. Like a ghost, they try to be invisible to the fact they’ve prepared the return and will print the return and get the taxpayer to sign and mail it. For e-filed returns, the ghost preparer will prepare but refuse to digitally sign it as the paid preparer.
By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.
Unscrupulous tax return preparers may also:
• Require payment in cash only and not provide a receipt.
• Invent income to qualify their clients for tax credits.
• Claim fake deductions to boost the size of the refund.
• Direct refunds into their bank account, not the taxpayer’s account.
The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.
No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for preparers putting their bank account information onto the returns.
WASHINGTON — The Internal Revenue Service today reminds taxpayers that the fastest way to get their tax refund is by filing electronically and choosing direct deposit.
Direct deposit is free, fast, simple, safe and secure. Taxpayers can even split their refund to have it deposited into one, two or three different accounts.
Eight out of 10 taxpayers get their refunds by using direct deposit. The IRS uses the same electronic transfer system to deposit tax refunds that is used by other federal agencies to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.
Direct deposit also avoids the possibility that a refund check could be lost or stolen or returned to the IRS as undeliverable. And it saves taxpayer money. It costs more than $1 for every paper refund issued, but only a dime for each direct deposit.
Easy to use
A taxpayer simply selects direct deposit as the refund method when using tax software or working with a tax preparer, and either they or their tax preparer type in their account and routing number. It’s important to double check entries to avoid errors.
The IRS reminds taxpayers they should only deposit refunds directly into U.S. affiliated accounts that are in their name, their spouse’s name or both if it’s a joint account. Many people do not use checks and may find their routing and account numbers on their online bank account or mobile app.
Taxpayers may have a refund applied to their prepaid debit card. Many reloadable prepaid cards have account and routing numbers that could be provided to the IRS. But check with the financial institution to make sure the card can be used and verify the routing number and account number, which may be different from the card number.
There are mobile apps that may allow for direct deposit of tax refunds. They must have routing and account numbers associated with them that can be entered on a tax return. Check with the mobile app provider to confirm what numbers to use.
Have the bank routing and account number when having taxes prepared. The IRS does not have the ability to accept this information after a return is filed.
Don’t have a bank account?
Visit the FDIC website for information on where to find a bank that can open an account online and how to choose the right account. Veterans can use the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks. Tax return preparers may also offer electronic payment options.
Split refunds
By using direct deposit, a taxpayer can split their refund into up to three financial accounts, including a bank or Individual Retirement Account. Part of the refund can even be used to purchase up to $5,000 in U.S. Series I Savings Bonds.
A taxpayer can split their refund by using tax software or by using Form 8888, Allocation of Refund (including Savings Bond Purchases), if they file a paper return. Some people use split refunds as a convenient option for managing their money, sending some of their refund to an account for immediate use and some for future savings.
No more than three electronic tax refunds can be deposited into a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund will be issued for the refunds exceeding that limit.
Combining Electronic Filing plus direct deposit yields fastest refunds
The safest and most accurate way to file a tax return is to file electronically. Many people may be eligible to file electronically for Free. Most refunds are issued in less than 21 days, but some returns may take longer. Taxpayers can track their refund using “Where’s My Refund?” on IRS.gov or by downloading the IRS2Go mobile app.
“Where’s My Refund?” is updated once daily, usually overnight, so there’s no reason to check more than once per day or call the IRS to get information about a refund. Taxpayers can check “Where’s My Refund?” within 24 hours after the IRS has received their e-filed return or four weeks after mailing a paper return. “Where’s My Refund?” has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved, and (3) Refund Sent.
Categories
Finances and Sex Work
Starting out or working in the sex industry can be daunting in terms of the financial aspects. Money is coming in, sometimes more than you’ve ever made or even seen before. It can be a bit overwhelming to plan and handle your money. I am not at all a tax professional, financial planner, or really anything but a whore with some experience. This is just advice from me to you, not intended to substitute for professional (well, that kind) advice. It was also not intended to help you avoid the system. Pay your taxes!
First and foremost, you need to plan your budget. How much money do you need to pay rent, utilities, credit card payments, loans, car payments, food bills, and so on? How much money do you need each week or month in order to cover the necessities? Figure this out first. Everything else after this amount is disposable income.
Based on your budget, some market research, and the guidance of other sex workers, calculate your rate. I’m not an expert on this. There are others who can help you, like the book The Internet Escort’s Handbook by Amanda Brooks. Similar principles apply, no matter what type of sex work you do.
Set up a book-keeping system. Having no way to track how much money is coming in and going out will end up hurting you. You’ll have no way to know what you’re averaging and how much you’re spending. This can be as simple as a writing down everything you make in a notebook or as complex as a color-coded spreadsheet or financial software. A good, basic system is the date, the number of or type of appointment or job, and the amount made.
Figure out how to handle your cash. If you are working for a club, dungeon, or company that issues you a paycheck instead of you dealing with cash, skip this.
Decide what you want to do with your cash. Keep in mind that anything you deposit in a bank account, pay bills with, or buy large items with leaves a paper trail. If you want to keep your cash handy, one thing you should invest in is a good fire-proof safe. Keeping a lot of cash on hand is risky as a sex worker. If others find out, you can be at risk of robbery. A safe can help. Don’t hide cash in obvious places, like your mattress, the freezer, your toilet tank, and so on. If you’ve seen it in a movie, other people have, too. Consider having a dummy safe. This is a safe you hide in a more obvious place (under your bed, for example) and keep a small amount of cash in. Then, get a good, sturdy, floor-bolted safe or wall safe to keep more in. If a thief breaks in, the thief will quickly discover your dummy safe and leave your main safe alone.
Depositing cash is a good idea. Consider either a safety deposit box or a bank account. It’s a good idea to have three bank accounts: a personal checking, a savings, and a “business” checking. This can just be a personal account you filter all of your money through before it goes into your personal account. Keeping your money separate can demonstrate that you are organized in your business book-keeping.
Now that you have a budget and are handling your money, start some basic financial planning. What are your long term goals? Are you doing sex work to pay for something, pay off something? A really good rule of thumb is to have three months’ of expenses in savings. That way, if you want to take a break, you get fired, transition, the market turns around, you are hurt and can’t work, you’ll have a cushion. You’ll also have money in case of an emergency, like a car breaking down or a medical bill.
If you can afford it, consider basic health insurance, catastrophic only. If you are young and have no major health problems, you can usually get this cheaply. It will have a high deductable (sometimes $5,000 to $10,000), so it’s not for your annual exam or going into the doctor when you have a cold. It’s just in case you have a major event happen. If you get hit by a car or something equally terrible, the medical bills can wipe you out. Having insurance can protect you.
Once you have met your savings goal of three months’ expenses, start a savings plan for other things. If it’s for school, for a car or a house, or something else, think about your investments. This is my weakest area because, to be honest, having enough money to invest has never really happened to me before. But consider seeing a financial planner for this service, or someone like the Financial Madam. You can make low risk investments, like a savings account with interest, savings bonds, or certificates of deposit. You can also make higher risk investments, like stocks. Having a long-term retirement plan is an awesome idea.
In general, try to be smart with your money. If something is a business investment (like a computer to check your email on, a car, or sometimes clothes), talk to your tax preparer about what is deductible. Otherwise, try to avoid the impulse to spend all of your money just because it’s there. I went through a period like that when I first started working. I had an awesome time and got some lovely shoes, but when I needed to get out like right now, I had absolutely nothing to fall back on.
On the issue of things to do with your money, consider reinvesting in your business. Again, some of these things are tax deductible. Setting up a business model is a good idea. Decide what your long-term goals with your type of sex work are. Use some of your income to place ads in the right places to tap your target market. Get professional photographs. Set up a website. Make little investments to set yourself up for long-term success.
When things get more complicated, there are many more issues to consider, like becoming incorporated or becoming an LLC. These are things I know nothing about at all, hence, talk to a financial planner, an attorney, and definitely your fellow sex workers. Being smart with your money is the best way to gain your independence.
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