Hello Everyone! Chances are that you’ve already received notification about your second round of stimulus checks. This batch of checks is being issued much more quickly than the first round from 2020 (you can view see the Q & A regarding the first round of stimulus checks here). The second round of checks is part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (if you are in need of 2,124 pages of good bedtime reading, then you are in luck because you can find that bill —->here), signed into law by President Trump at 2020 year-end.
Since the new law took effect, I’ve been receiving phone calls, emails, and messages from people with questions about the second round of stimulus checks. As with anything tax-related, there’s a little bit of confusion. To help you sort it out, here are a few questions and answers:
Some General Questions:
What do I need to do to get my check? You don’t have to take any action to receive your checks: this second round of payments will be distributed automatically.
How big will my check be? Eligible individuals will receive checks of up to $600 for individuals ($1,200 for married couples) and up to $600 for each qualifying child. The amount of the checks would start to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household).
What’s a phaseout and how does it affect the amount of my check? The amount of the checks would start to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household). This is adjusted gross income (AGI), not taxable income – so this will be before your standard or itemized deductions.
How does a phaseout work? Phaseout means that the benefit goes down as income goes up. It’s a 5% drop which means that for every $100 of income above those thresholds, your check will drop by $5. So, if you are a single filer earning $75,100, your check will be $595 ($600 – $5). If you are a single filer earning $85,000, your check will be $100 ($600 – $500). If you do the quick math on that, it means that you’ll phaseout completely (meaning that you’ll get nothing) once you reach $87,000 as a single filer, $174,000 as a married couple filing jointly, or $124,500 for heads of household.
Does the phaseout apply to the dependent portion, too? Yes.
Are there limits on kids? There are no limits on the number of children that qualify. The definition of a child will be the same as for the child tax credit. There was no “dependent fix” which means that children 17 and over do not qualify as a dependent for purposes of stimulus checks.
But my child is 17 and lives with me and eats all of the food in my house. Are you saying I don’t get a check for my kid? Yes. Qualifying dependents must be under age 17 on December 31, 2019.
Wait, the child tax credit requires that the child be related to me. So, if I take care of a child who is not related to me, I can’t get a check for that child? That’s correct. The child has to be related to you, such as your son, daughter, stepchild, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, grandchild, niece, or nephew) – and meet the other criteria for dependency. Foster children and adopted children also qualify.
Will I need a Social Security Number to get a check? Yes. Or in the alternative, an adoption taxpayer identification number. Ditto for spouses and kids.
What about ITINs? You need a valid SSN to get a check. However, if you are married to someone with an ITIN and you file jointly, this will not disqualify you from getting a check (your spouse will not receive a check). Additionally, if you are a married taxpayer filing jointly and at least one of you has a valid SSN, you will receive a check for your dependent (this is different from the CARES Act). But if both of you and your spouse do not have an SSN, your child will not receive a check even if your child has an SSN. Additionally, an ITIN won’t be accepted for a qualifying child.
Will seniors and retired people get a check? Yes. Seniors and retired people are eligible so long as they meet the other criteria (Social Security numbers, income thresholds, etc.).
What about those on government benefits? And those with no income? Yes, eligible people include those with no income, as well as those whose income comes entirely from benefit programs like as SSI or SSDI benefits.
So I don’t have to work to get a check? No.
What if I normally work but I am unemployed? That still doesn’t matter. You don’t need to work to be eligible for a check.
My husband/wife/grandmother/neighbor died this year. Are they eligible for a check? A payment won’t be issued to someone who has died before January 1, 2020. And if you filed a joint return in 2019 and your spouse died before January 1, 2020, you won’t receive a $600 payment for your deceased spouse, but you’ll still be eligible for your check plus the amount for any qualifying children.
My husband/wife/grandmother/neighbor is in jail. Are they eligible for a check? Yes. An incarcerated individual is entitled to a check if all eligibility requirements are met.
Will I still get the check if I owe the IRS some money? Yes.
What if my check is normally seized for child support? Yes, your second stimulus check will not be offset for any Federal or state debts. Your first stimulus check may have already been offset (the rules were different for the first round of payments under the CARES Act).
Timing and Payment
When will I get my check? Initial direct deposit payments began arriving last week. Paper checks were mailed beginning on Wednesday, December 30. Mailed payments, including those to check recipients who live abroad, will require more processing and mailing time.
How will I get my check? If you didn’t receive your earlier stimulus payment by direct deposit, you will receive a check or, in some instances, a debit card. If you don’t receive a direct deposit by early January, watch the mail for either a paper check or a debit card.
What if I changed or closed my bank account? If your account is closed, no longer active, or unfamiliar, your bank must return the payment to the IRS. If that happens, you won’t get your payment as a direct deposit: you’ll get a check.
What if I’ve moved? Under the law, the Treasury must send notice of the payment by mail to your last known address. The notice will include how the payment was made and the amount of the payment. The notice will also include a phone number for the appropriate point of contact at the Internal Revenue Service (IRS) if you didn’t receive the payment. You can help make sure that it goes to the right place by updating your address after a move. Usually, you’d do that on your tax return, but you can also submit a federal form 8822, Change of Address (it downloads as a PDF). It generally takes four to six weeks to process a change of address.
Can I update my bank account or my address online? No.
Status Of Your Check
How can I check on the status of my check? Use the Get My Payment tool on irs.gov: it’s updated once a day. You can find out more here.
But the Get My Payment tool ISN’T WORKING. What now? If you get a “please wait” or error message, the IRS says that’s normal and is due to the high volumes coming in. Check back later.
When I did come back to Get My Payment later, it still was not working. Now what? There is a limit to the number of times people can access Get My Payment each day. When people reach the maximum number of accesses, Get My Payment will inform them they will need to check back the following day.
What happens if Get My Payment says “not available”? If the tool shows “Payment Status #2 – Not Available,” then you will not receive a second Economic Impact Payment and instead you need to claim the Recovery Rebate Credit on your 2020 Tax Return.
Taxes and Benefits
Is my check taxable? No, no, and BTW…..no. This is not taxable income.
Do I have to pay it back? No.
Will my federal benefits, like food stamps, be affected? No.
How will this affect my 2020 tax return? If you did not receive the full amount of stimulus payments that you were entitled to receive, you can fix it on your 2020 tax return (the one you’ll file this year, in 2021). There will be a worksheet on your tax return so that you can calculate what’s called the Recovery Rebate Credit. You will need to know the amounts of the first and second payments to fill out the worksheet.
Do you have any other articles related to stimulus payment? It’s funny you should ask but I wrote an article about whether or not Nursing Homes are allowed to keep your stimulus check. You can find that article —–> here. And for those of you who will be receiving a physical check (rather than a direct deposit), you can find out how to tell if that stimulus check is real with this article here.
EVERYONE PLEASE, PLEASE, PLEASE STAY WELL and STAY HEALTHY!
Bruce – Your Host at The Tax Nook
Our Firm’s Website: SolidTaxSolutions.com