Economic Impact Payments (Stimulus Payments)
To combat the financial devastation wrought by the pandemic, the CARES Act (passed in the Spring of 2020) included stimulus payment paid directly to taxpayers. The payments were up to $1200 for the Taxpayer and Spouse of a household; and $500 for dependent children under the age of 17. Income limitations were set so that stimulus payments were phased out as married taxpayer’s earnings approached $198,000 and single taxpayer’s earnings approached $99,000.
IRS was tasked with two diametrically opposing goals; get the money out FAST and do it accurately. As you can imagine, the original payments were a logistical nightmare and chaos ensued. For instance, if the IRS had not processed a taxpayer’s 2019 returns, it based the payments on 2018 information. What if 2019 information was dramatically different from 2018? How do taxpayers not required to file a tax return get their stimulus (social security recipients)? What if a child was a dependent in the past but would not be a dependent in 2020? What if a taxpayer’s bank account or address had changed since last filing a return? Pure chaos.
After much politicking, Congress finally got around to passing additional relief at the end of the 2020 that included a second round of stimulus. Here are the eligibility requirements for the second round of stimulus:
Generally, you may be eligible for $600 ($1,200 for a joint return), plus $600 for each dependent child under the age of 17. The income restrictions are:
- $150,000 if married and filing a joint return;
- $112,500 if filing as head of household; or
- $75,000 for individuals using any other filing status.
You are not eligible for a payment if any of the following apply to you:
- You were claimed as a dependent on another taxpayer’s 2019 tax return.
- You do not have a valid social security number.
- You are a nonresident alien.
- You died before 2020.
Round 2 ½?
In early January, the House passed a bill that would increase the $600 per person stimulus to $2000 per person. If that becomes law, a new tranche of payments will be issued. We will see.
Recover Rebate Credit “The True-up”
It is likely that millions of Americans did not receive the correct amount of stimulus payments. To ensure that you received the full amount of stimulus, your 2020 tax return will “true-up” the amounts you received versus what you should have received. It is essential that you provide us with the exact amount of stimulus payments you received from both the first and second rounds plus any additional amounts paid if additional stimulus payments are passed into law. If we prepare a child’s return for you, we must also know of any separate stimulus they received.
Frequently Asked Questions:
I did not receive the correct amount of Round One stimulus payments. What should I do?
The IRS is no longer sending out Round One payments. Any discrepancies between what you received or should have received will be “fixed” by filing your 2020 return.
I have not received a payment for Round Two. Will I get one?
Maybe. The IRS updated the IRS.gov/getmypayment (GMP) website for individuals who are receiving the second stimulus payment on January 5, 2021. If you checked GMP on or after January 5 then:
- If GMP reflects a direct deposit date and partial account information, then your payment is deposited there.
- If GMP reflects a date your payment was mailed, it may take up to 3 – 4 weeks for you to receive the payment. Watch your mail carefully for a check or debit card.
- If GMP shows “Payment Status #2 – Not Available,” then you will not receive a second payment. Rather, you will need to claim the Recovery Rebate Credit on your 2020 Tax Return.
What if I have a different bank account now that when I filed my 2019 tax return?
If the second payment was sent to an account that is closed or is no longer active the financial institution must, by law, return the payment to the IRS. they cannot hold and issue the payment to an individual when the account is no longer active. You must file your return to get the payment.
What if my payment was mailed but the Post Office was unable to deliver it?
If the Post Office is unable to deliver your payment, it will be returned to the IRS and you’ll need to file your 2020 return to get the stimulus.
Can I change my address or bank account information on the Get My Payment Webpage?
No. GMP will not allow you to change your address or banking information. If your payment cannot be delivered to you for any reason and is returned to the IRS, you will need to file your 2020 return.
Will I receive a letter or notice from the IRS about my payment?
Yes, the IRS will issue a notice, or letter, about the second payment. They will provide an update on the timeline for delivery of the notices when one is available.
Please keep your notice, formally called Notice 1444-B, with your tax records.
What if I received more than I was entitled?
The IRS is not requiring taxpayers who received more than they were entitled to pay it back.