9 Things to Know about the Second Round of Economic Impact Payments
Reading time: 6 Minutes
January 6th, 2021
A second round of Economic Impact Payments (EIP) is going out to more than 147 million qualifying individuals, starting as early as this week. The payments, which are part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, will generally be $600 for eligible individuals and $1,200 for eligible married couples filing a joint return. Those with dependents may also receive an additional $600 for each qualifying child.
Want to know whether you're receiving a check, and when to expect it? Here are nine things to know about this second round of economic impact payments:
1. Most people don't need to take action to receive payment.
The Internal Revenue Service (IRS) and the Treasury Department announced that distribution of a second round of economic impact payments will begin this week and no action is required for most people. The IRS will calculate and automatically distribute payments, either directly deposited into the same bank account where you receive your tax refunds or in the form of a paper check or debit card that will arrive by mail. Some U.S. residents may see a pending direct deposit payment or a provisional payment in their bank accounts before their official payment date. The government is prioritizing initial payments toward Social Security beneficiaries and low-income Americans. The IRS says people with questions should check the IRS Get My Payment tool for more information on payment timing.
2. The amount you receive is based on your income.
Economic impact payments are allotted in a few different categories, which are based on the same criteria as the first round of EIP:
- Individuals with an adjusted gross income (AGI) of $75,000 or less per year will receive $600
- Individuals filing as heads of household with an AGI of $112,500 or less will receive $600
- Married couples filing jointly whose combined AGI is $150,000 or less per year will get $1,200.
- People who aren't normally required to file a tax return, such as senior citizens and Social Security recipients, may also receive $600.
Payment amounts will be reduced for individuals and households making more than that the maximum level, by 5 percent of the amount by which their AGI exceeds the applicable threshold above. For eligible individuals with no qualifying children, the payment is reduced to $0 if their AGI is at least:
- $99,000 if filing as single or married filing separately
- $136,500 if filing as head of household and
- $198,000 if filing married filing jointly
For individuals with qualifying children, these total-phase-out amounts increase by $10,000 for each qualifying child.
3. You'll be notified after funds have been dispersed.
Economic impact payments will be directly deposited into the bank account listed on your 2019 or 2018 tax returns. If no account is listed, the IRS will mail a paper check or prepaid debit card to the most recent address they have for you on file. By law, the U.S. Treasury must also mail a notice of payment to your last known physical address.
4. You can check with the IRS online for the status of your payment.
By visiting the Get My Payment tool on IRS.gov, you can find the current status for both your first and second payments. Your financial institution will not have access to your payment status or eligibility.
5. You can still qualify for this second payment when filing your 2020 tax return, even if you didn't qualify based on previous returns.
Those that may have already filed their 2019 taxes and earned too much to qualify for an economic impact payment—but who have since become unemployed—will still be able to claim the EIP on their 2020 taxes.
This isn't necessarily helpful for people who are struggling without income right now, but an important thing to keep in mind is that an EIP may still be available.
6. The IRS may have deposited funds to your tax-preparer.
If you use a third party to prepare your taxes, such as H&R Block, the IRS may have mistakenly deposited your economic impact payment to their account instead of your individual account. If you are expecting an economic impact payment and use a third party to prepare your taxes, reach out to them directly if you do not receive your payment as expected.
7. Your payment isn't affected even if you owe the IRS money.
Although the federal government can take your annual tax refund and apply it toward any money owed to the IRS, economic impact payments will not be seized to pay tax debt. The only instances where an economic impact payment might be affected is if you owe child support money, or if you're currently overdrafted with the bank handling your direct deposit.
8. 17-year-olds and most dependent college students won't qualify.
Seventeen-year-olds and many of the roughly 20 million college students in the United States who are claimed as dependents won't get checks, and their guardians won't receive any extra payment.
Even if parents haven't filed their taxes yet and are hoping not to claim their children (so that the kids may file a simple tax return to become eligibility to receive an EIP), students under the age of 24 are considered dependents by law if someone else provides more than half their support and they aren't married and filing a joint tax return.
9. Be vigilant about coronavirus-related scams.
Especially in light of concerns about COVID-19, scammers may be aiming to capitalize on any recent confusion related to the coronavirus or economic impact payments. The IRS is warning taxpayers to be cautious of phone calls and email phishing attempts, which can lead to identity theft or tax-related fraud.
As a reminder, the IRS will never initiate contact over email, text messages, or social media channels to ask for personal financial information or to request money. Other red flags of a possible scam include the use of casual phrases such as “stimulus payment" or “stimulus check" (the official term is economic impact payment); messages suggesting tax refunds or economic impact payments may arrive sooner if taxpayers provide banking information via email, text, or social media; and the arrival of bogus checks requiring a phone call or personal information verification in order to be cashed.
The IRS encourages people to forward any unsolicited emails to firstname.lastname@example.org. To learn more about suspected scams, visit the Report Phishing and Online Scams page at IRS.gov.
For more information about Economic Impact Payments and the 2020 Recovery Rebate, visit IRS.gov/eip. You can also check the status of your payment at IRS.gov/GetMyPayment. For other COVID-19-related tax relief, visit IRS.gov/Coronavirus.
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