IRS guidance and frequently-asked-questions about your second payment
On December 29th, the Internal Revenue Service and the Treasury Department announced that the second round of payments – which is generally $600 for individuals and $1,200 for married couples filing a joint return – was on the way. In addition, those with qualifying children will receive an additional $600 for each qualifying child. Dependents who are 17 and older are not eligible for the child payment.
Created as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, the second round of payments would begin to be distributed to millions of Americans before the end of the year. The IRS was also quick to state that there is no action required to receive this second payment, as the payments are automatic for taxpayers and payments will be received either by direct deposit or paper checks.
Eligible individuals who did not receive an Economic Impact Payment this year (either the first or second payment) will, however, be able to claim it when they file their 2020 taxes. The IRS urges those who did not receive a payment to review their eligibility criteria when they file their 2020 taxes. Detailed information, including payment criteria, can be found on IRS.gov.
FAQs from the IRS
Here is some more helpful information taken directly from the IRS website:
Payments are automatic for eligible taxpayers
Payments are automatic for eligible taxpayers who filed a 2019 tax return, those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits as well as Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who didn’t file a tax return. Payments are also automatic for anyone who successfully registered for the first payment online at IRS.gov using the agency’s Non-Filers tool by November 21, 2020 or who submitted a simplified tax return that has been processed by the IRS.
Who is eligible for the second Economic Impact Payment?
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. Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.
How do I find out if the IRS is sending me a payment?
People can check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov. The tool is being updated with new information, and the IRS anticipates the tool will be available again in a few days for taxpayers.
How will the IRS know where to send my payment? What if I changed bank accounts?
The IRS will use the data already in our systems to send the new payments. Taxpayers with direct deposit information on file will receive the payment that way. For those without current direct deposit information on file, they will receive the payment as a check or debit card in the mail. For those eligible but who don’t receive the payment for any reason, it can be claimed by filing a 2020 tax return in 2021. Remember, the 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.
Will people receive a paper check or a debit card?
For those who don’t receive a direct deposit by early January, they should watch their mail for either a paper check or a debit card. To speed delivery of the payments to reach as many people as soon as possible, the Bureau of the Fiscal Service, part of the Treasury Department, will be sending a limited number of payments out by debit card. Please note that the form of payment for the second mailed EIP may be different than for the first mailed EIP. Some people who received a paper check last time might receive a debit card this time, and some people who received a debit card last time may receive a paper check.
IRS and Treasury urge eligible people who don’t receive a direct deposit to watch their mail carefully during this period for a check or an Economic Impact Payment card, which is sponsored by the Treasury Department’s Bureau of the Fiscal Service and is issued by Treasury’s financial agent, MetaBank, N.A. The Economic Impact Payment Card will be sent in a white envelope that prominently displays the U.S. Department of the Treasury seal. It has the Visa name on the front of the Card and the issuing bank, MetaBank, N.A. on the back of the card. Information included with the card will explain that this is your Economic Impact Payment.
Your Financial Advisor
The fact is that the CARES Act was by far the largest economic bill in America's history and the second COVID relief details are part of a bill that is over 5,000 pages long. Further, with a federal tax code that is over 2,500 pages, no wonder tax strategies can be overwhelming.
So, before you go down a path that might not be in your best interest long–term, make sure you consult with your financial advisor before embarking on an investing strategy that might impact you and your family.
Copyright © 2021 FMeX. All rights reserved. Distributed by Financial Media Exchange.
Nothing contained herein shall constitute an offer to sell or solicitation of an offer to buy any security. Material in this publication is original or from published sources and is believed to be accurate. However, we do not guarantee the accuracy or timeliness of such information and assume no liability for any resulting damages. Readers are cautioned to consult their own tax and investment professionals with regard to their specific situations.