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“Show Me the Money” FAQs for the Stimulus Payments Part 2

| January 12, 2021
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On December 27, 2020, Congress passed another shot for the ailing economy due to the coronavirus.  Like the first Coronavirus Aid Relief and Economic Security (CARES) Act, the most common questions we’ve received from clients relate to payments to individuals.  Here are a few answers to commonly asked questions.  Keep in mind that many changes are still happening within government agencies and Congress. More clarifications are likely in the future.

 

  1. How much is the second stimulus payment and who is eligible?
  • The CARES Act provides stimulus payments of up to $600 for each individual and $600 for each child (under age 17).
  • Individuals with adjusted gross incomes up to $75,000 (or $150,000 for married filing jointly) are eligible for the full amount. The stimulus payment starts to phase out at an AGI of $99,000 (MFJ $198,000).
  • It is not available to those without a SSN, nonresident aliens, or adult dependents.
  • College students will not receive a stimulus payment if they are claimed as dependents on their parent’s tax return.

 

  1. Do I need to do anything to receive the payment?

Per the IRS, no action is necessary. Your payment will be issued based on the information the IRS has on file for your 2019 tax return, the information provided by you to the “Non-Filers: Enter Payment Info Here” tool online with the IRS, payment information entered on the “Get My Payment” tool, or information provided by a Federal Agency that issued benefits to you (Social Security Administration, Veteran Affairs, or Railroad Retirement Board).

If you don’t get a payment and you are eligible to receive one, it may be claimed on your 2020 tax return as the Recovery Rebate Credit.

 

  1. When will the IRS start sending the second round of stimulus payment?

Payments began during the last week of December with more occurring in early January.  Direct deposits payments will be made first, followed by mailed payments.

 

  1. I haven’t received a direct deposit yet. Will I receive a second stimulus payment?
  • The IRS has updated their Get My Payment (GMP) tool for individuals receiving the second stimulus payment January 5.  Per the IRS:
    • 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. (Here is a FAQ about the debit card)
    • If GMP shows “Payment Status #2 – Not Available,” then you will not receive a second payment and instead you need to claim the Recovery Rebate Credit on your 2020 Tax Return.

 

  1. What if I have a different bank account now than on my 2019 tax return or where I received the first round of stimulus payment?

The IRS will have attempted to send the stimulus payment to the same bank account used for the first round of stimulus payments.  If that account is closed or no longer active, the financial institution must, by law, return the payment to the IRS.  Unfortunately, due to the compressed timeline the IRS is required by law to follow while still preparing for the upcoming tax filing season, the IRS does not have the capability to reissue and mail checks or allow individuals to provide an updated bank account.  If individuals do not receive the full stimulus payment (both first and second rounds), the IRS advises individuals to file their 2020 tax return electronically and claim the remaining Recovery Rebate Credit (stimulus payment) as soon as possible.

 

  1. What is the Recovery Rebate Credit?

The Recovery Rebate Credit is a refundable tax credit authorized by the CARES Act.  The first and second round of stimulus payments is actually an advance of this credit.  Any eligible individual who didn’t receive the full amount of both first and second round of stimulus payments may claim the Recovery Rebate Credit for their remaining amount on their 2020 taxes.

 

  1. Will a deceased individual receive a payment?

The IRS will not issue a payment for individuals who were deceased before January 1, 2020.

Eligible individuals who died in 2020 may claim the Recovery Rebate Credit on their 2020 tax return.

 

The IRS has said it will update all key information as it becomes available at IRS.gov/coronavirus.  For more information about the stimulus payments and the 2020 Recovery Rebate Credit, visit IRS.gov/eip. The information above is obtained from sources believed to be reliable. If your particular situation is not covered by the above, then please contact us.

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