Economic impact payments are on the way!
As the COVID-19 pandemic continues to ravage the country and many are struggling economically, the IRS and the Treasury Department began issuing a second round of economic impact payments last week. Rather than calling the IRS, your financial institution, or tax software provider, the IRS encourages everyone to visit IRS.gov for the most current information on the stimulus payments.
The direct deposit payments may take several days to post to your account. You may have already seen the direct deposit payments as pending or as a provisional payment in your account before the scheduled payment date of Jan. 4, 2021, which is the official date funds are available.
Paper checks also began going out and will continue to be sent through January. You may be mailed a debit card in January, so you should carefully check your mail. Mailed payments will require more processing and mailing time. Those who reside abroad will have longer wait times for checks as disruptions to air travel and mail delivery in some countries will slow delivery.
The IRS emphasizes that there is no action required by eligible individuals to receive this second payment. The payments are automatic. You should not contact your financial institution or the IRS with payment timing questions.
Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment. Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. Most people, who have an adjusted gross income for 2019 of up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.
- Are More People Eligible Now for a Payment Than Before?
Under the earlier CARES Act, joint returns of couples where only one member of the couple had a Social Security number were generally ineligible for a payment – unless they were a member of the military. But this month’s new law changes and expands that provision, and more people are now eligible. In this situation, these families will now be eligible to receive payments for the taxpayers and qualifying children of the family who have work-eligible SSNs. People in this group who don’t receive an Economic Impact Payment can claim this when they file their 2020 taxes under the Recovery Rebate Credit.
- What about Social Security Beneficiaries, Railroad Retirees, and Those Receiving Veterans’ Benefits Who are Not Typically Required to File a Tax Return?
Most Social Security retirement and disability beneficiaries, railroad retirees, and those receiving veterans’ benefits do not need to take any action to receive a payment. Earlier this year, the IRS worked directly with the relevant federal agencies to obtain the information needed to send out the new payments the same way benefits for this group are normally paid. For eligible people in this group who didn’t receive a payment for any reason, they can file a 2020 tax return.
- What If I Didn’t File a Tax Return and Didn’t Register with the IRS.gov Non-filers tool. Am I Eligible for a Payment?
Yes, if you meet the eligibility requirement. While you won’t receive an automatic payment now, you can still claim the equivalent Recovery Rebate Credit when you file your 2020 federal income tax return.
Will I Receive Anything for My Tax Records Showing I Received a Second Economic Impact Payment?
Yes. You will receive an IRS notice or letter after you receive a payment telling you the amount of your payment. You should keep this for your tax records.
Checking the Status of a Payment
You can check the status of both your first and second payments by using the Get My Payment tool, available in English and Spanish, and only on IRS.gov.
Payment Not Received or Less Than Expected? Claim on 2020 Tax Return
Payments started going out last week and will continue through mid-January. Direct deposit payments are being made first to those who have valid routing and account information on file for direct deposit purposes. Because of the speed at which the IRS issued this second round of payments, some payments may have been sent to an account that may be closed or no longer active. By law, the financial institution must return the payment to the IRS. They cannot hold and issue the payment to an individual when the account is no longer active. While the IRS is exploring options to correct these payments, if you have not received your full payment by the time you file your 2020 tax return, you may claim the Recovery Rebate Credit on your tax return.
The credit is figured like the Economic Impact Payment, except the credit eligibility and the credit amount are based on the 2020 tax year information, including income.
Changing Bank Account or Mailing Information
The IRS cannot change payment information, including bank account or mailing information. If an eligible taxpayer does not get a payment or it is less than expected, it may be claimed on the 2020 tax return as the Recovery Rebate Credit. Remember, Economic Impact Payments are an advance payment of what will be called the Recovery Rebate Credit on the 2020 Form 1040 or Form 1040-SR.
A Final Note
IRS phone lines have been overwhelmed with people trying to get information on these payments. You must visit IRS.gov/GetMyPayment to learn the status of your payment. For questions about claiming the Recovery Rebate Credit when you file your taxes, you can always contact your local tax professional.
Stay safe. Stay well. Stay home.
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