How Soon Can I Expect That Second Stimulus Payment?

Theeconomic stimulus measure nearing approval in the U.S. Congress includes a second round of direct stimulus payments to households — an acknowledgment that families need another injection of cash to get through the latest surge in virus cases and lockdowns. This time, lawmakers are set to approve $600 checks for most adults and $600 for each of their children. The hope is that the payments, along with additional money for small businesses, jobless individuals and more nutrition benefits, can help bolster households and combat rising poverty rates.

1. How much money should I expect to get?

If you earn less than $75,000, or you and your spouse collectively make less than $150,000, you’ll get $600 for each of you plus $600 for each dependent child. Those payment amounts are reduced by $5 for every $100 you earn above the income threshold, which means those earning more than $87,000 as an individual or $174,000 as a couple get nothing. Also receiving the payments: seniors whose only income is from Social Security, railroad retirees and veterans who rely on disability payments. If the IRS issues more than you are supposed to receive, you do not have to pay the excess amount back. The payments are not allowed to be reclaimed to pay for back federal or state debts, and banks are forbidden from garnishing the payments.

2. How does this compare with the first round of payments?

The $2 trillion stimulus package enacted in April, theCares Act, had the same income eligibility thresholds but provided $1,200 for adults and $500 for children. As of mid-November, the Internal Revenue Service had issued about 160 million payments totaling approximately $270 billion under that initial program. It also had sent letters to about 9 million individuals who might have been eligible for the money but didn’t receive it, encouraging them to submit their information to see if they qualify. (The latest legislation clarifies that mixed-status immigration households — those in which one spouse has a Social Security number and one does not — can still get payments for the spouse and any children with Social Security numbers.)

3. When and how will I receive the money?

Treasury Secretary Steven Mnuchin says the payments will start going out the week of Dec. 28. Direct-deposit payments will arrive quickest, while checks sent by mail could take until late January to start arriving. The IRS was able to begin transferring the first round of payments less than three weeks after the Cares Act was signed into law, but paper checks took longer. IRS Commissioner Chuck Rettig says the agency is better prepared and will be able to process payments more quickly, but hasn’t set a specific timeline. The agency will largely use the address and bank account information collected from taxpayers during the first round of payments to transfer the money. Social Security beneficiaries may not be required to submit any additional paperwork to the IRS, because the agency will likely send them their stimulus payments just as they normally disburse their other monthly benefits.

4. What happens if my income or family situation has changed in 2020?

The IRS will use the information from your most recent tax return — in most cases from 2019 or 2018 — to determine eligibility based on your income, marital status and dependents. However, many peoplehave taken pay cuts or lost wages in 2020 as a result of the pandemic. If you weren’t eligible for a payment based on your most recent tax return on file at the IRS, but will be based on lower income in 2020, you can inform the IRS on the tax return you file in the spring. On that paperwork, you can claim the payment for yourself and any qualifying dependents. The IRS will add the additional amounts to your tax refund.

5. What if I’m still waiting for the first check?

If that first payment hasn’t yet hit your bank account or mailbox, or you got less than you think you’re owed, you can also add that claim on the tax return you file in 2021. The IRS is calling it theRecovery Rebate Credit, and this year’s version of the Form 1040, the individual tax return, has instructions on how to fill that out. You can check the status of your payment at the IRS’sGet My Payment online tool.

6. Do I owe any taxes on stimulus benefits?

No. These direct payments aren’t subject to federal taxes. However, individuals who receive unemployment benefits will be subject to taxes on that money, which will be due when they file their tax returns this spring.

The Reference Shelf

  • Tracking thestimulus measures of major economies.
  • The IRS hasanswers to many questions at their at the Economic Impact Payment Information Center.
  • Last round, residents inlow-wage red states got bigger checks on average.
  • Next tax season could be anightmare for taxpayers trying to reconcile benefit oversights.
  • The New York Fed found manypeople saved, rather than spent, their first stimulus check.
  • Bloomberg Opinion’s Karl W. Smithargued against another round of direct payments.

Source: Read Full Article