Economic Impact Payments
Internal Revenue Service and the Treasury Department will begin delivering a second round of Economic Impact Payments (EIP) as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year. The direct deposit payments will continue until January 15, 2021. The second round of EIP payments will be $600 per individual taxpayer ($1,200 married couple) and $600 per qualifying child. These payments are subject to adjusted gross income (AGI) thresholds. If your 2019 AGI was more than $87,000 as a single filer, $124,500 as a head of household filer or $174,000 as a joint filer, you are not eligible for an EIP.
As with the first round of payments under the CARES Act, most recipients will receive these payments by direct deposit. For Social Security and other beneficiaries who received the first round of payments via Direct Express, they will receive this second payment the same way. Anyone who received the first round of payments earlier this year but doesn’t receive a payment via direct deposit will generally receive a check or, in some instances, a debit card. For those in this category, the payments will conclude in January. The IRS emphasizes that there is no action required by eligible individuals to receive this second payment. IRS recommends using their Get My Payment Tool the status of your EIP. If status shows “Not Available,” you will not be receiving a payment. If you are eligible you will need to claim the Recovery Rebate Credit (RRC) on your 2020 tax return.
Eligible individuals who did not receive an EIP this year – either the first or the second payment – will be able to claim it when they file their 2020 taxes in 2021. Taxpayers will see the EIP or RRC on Form 1040 or Form 1040-SR since the EIP’s are an advance payment of the RRC. The RRC covers the first and second rounds of EIP payments. AS the EIP’s were calculated based on 2019 tax years, you may be eligible for the RRC on your 2020 tax return as your 2020 circumstance may differ substantially from 2019. You could be entitled to a 2020 RRC credit even though an EIP was not issued if:
- You had changes in your family, tax filing status or dependency status.
- 2020 income levels fell beneath EIP thresholds.
- Processing problems precluded you from receiving an EIP.
To claim the RRC taxpayers will need to reconcile their EIP with any RRC amount for which they are eligible on their 2020 tax return.January 11, 2021 12:14 pm