Contained in the Consolidated Appropriations Act, 2021 was another round of stimulus checks. While similar to the checks that were authorized in March of 2020, these payments will be different in a few ways. Below is a table that outlines the payments and income qualifications. You can see that there is a small increase for dependents and a limitation on the tax year that will be used to see if you qualify for the stimulus payment. The dependent child is not required to be under age 17.
Example: A Family of four with two dependents, with an income of less than $150,000 per year, will receive a stimulus check of $2,400. There is a phase-out of the stimulus checks for individuals and families who earned more than the Adjusted Gross Income (AGI) limits listed above. The stimulus is reduced by $5 for every $100 in excess of the AGI limit; every $12,000 over the limit reduces the payment by $600.
Nonfilers who applied for the Economic Impact Payment through the portal on the IRS website (irs.gov) will also receive these payments and will not need to file again. IRS.gov website has many frequently asked questions from the first round of stimulus checks. In most cases, these situations will still apply to this second round of stimulus checks as well. Stimulus checks received for someone who is recently deceased will need to be returned.
Just as with the March stimulus payment, you will not be required to repay the stimulus payment if your income for the tax year 2020 is higher than the tax year 2019. Conversely, if you would have received a higher stimulus payment due to your 2020 AGI, that additional amount will be an additional refundable payment on your 2020 Individual Income tax return.
NEW! Taxpayers with spouses who are nonresident aliens will now qualify for the additional $600 payment for their spouse. This qualification is retroactive and will be available on the 2020 tax return as an additional refundable payment if you qualify due to your income level. It is important that you let your tax advisor at Hawkins Ash CPAs know the amount of both stimulus payments that you received so we can get any additional available payment that might be due to you when we prepare your 2020 income tax return.
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The direct deposit payments are expected to begin after January 1, 2021. Even though the stimulus payments are not available until the tax year 2021, we will need this information to file your 2020 Individual Income Tax Return. The payments will be made via direct deposit if the IRS has that information from the filing of your 2019 income tax return.
IRS Urges Use of IRS.gov
On January 4th the IRS issued release IR-2021-01, urging those seeking current information on the second round of Economic Impact Payments, to visit IRS.gov rather than calling the agency, financial institutions or tax software providers. The IRS states that the phone assistors have no additional information from what is on the website.
The release IR-2021-01 also provides guidance on eligibility matters, how to check payment status, how to claim unreceived or incorrect payments and what to do if an individual has changes to their bank account or mailing information.View Release