Don't Mess With Taxes

Some taxpayers awoke today to $600 (or more!) in their bank accounts. The money is the maximum per-person amount authorized by Congress and signed into law on Dec. 27 as part of the second COVID-19 economic relief measure.

The Internal Revenue Service, which once again is in charge of distributing the economic impact payments (EIPs), says the electronic delivery will continue into next week. Some account holders may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of Jan. 4, 2021.

Sorry, but you'll just have to wait for the payment to clear. Since the payments are automatic, the IRS says it won't do you any good to contact the agency or your bank with payment timing questions.

As for folks who don't have an account at a financial institution, the says it will start mailing paper checks to eligible recipients today. Others may get a special EIP debit card.

If you got the first economic impact payment, then you're familiar with the distribution system. But here's a refresher, in a question-and-answer format, of the delivery system and some more on the new round of payments.

1. How much COVID-19 relief money could I get? This second round of coronavirus money, dubbed EIP 2, generally is $600 for singles and $1,200 for married couples who file a joint return and surviving spouses.

Individuals with qualifying children will also receive $600 for each qualifying child, defined by the recently enacted legislation as dependents who are younger than age 17.

And like the first round of payments, the amount is phased out based on income. If your adjusted gross income (AGI) for 2019 was $75,000 or less and you're a single filer, you'll get the full $600. The full $1,200 for married jointly filing couples and surviving spouses will go to taxpayers with AGI in 2019 of up to $150,000.

If you made more than those amounts, your EIP 2 amount will be reduced.

2. What do I have to do to get the payment? Nothing if you filed a tax return in 2020 for the 2019 tax year. The IRS will automatically send the EIP amount to eligible taxpayers based on that 2019 Form 1040 information.

3. Are beneficiaries of government program payments eligible? Just like with the first EIP distribution, the millions of folks who didn't have to file a tax return but who receive various government benefits will get EIP 2 money. The arrangement created back in the spring remains the same.

Specifically, folks who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits as well as Supplemental Security Income (SSI) and Veterans Affairs beneficiaries also should automatically get EIP 2 money.

The IRS says the payments are automatic for these government benefits recipients who:

• Successfully registered for the first payment online at the agency's Non-Filers tool by Nov. 21 or
• Submitted a simplified tax return that has been processed by the IRS.

Social Security and other beneficiaries who received the first round of payments via Direct Express will receive this second payment the same way.

Anyone who received the first round of payments earlier this year but doesn't receive a payment via direct deposit will generally receive a check or, in some instances, a debit card. For those in this category, the payments will conclude in January.

4. 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 at the IRS website. It's available in English and Spanish. But don't rush right over there. The online tracking tool is being updated with new information. It should be available again in a few days for taxpayers wanting to know the whereabouts of their EIP 2 money.

In addition, as with the first EIP, recipients of this second round of payments will receive an IRS notice, or letter, after they receive a payment telling them the amount of their payment. As with the first letter/notice, keep this document with your tax records. It will help if you can file for an additional payment amount on your 2020 tax return. (More on this a in question #7.)

5. What if I changed bank accounts since my first EIP? The IRS will use the data already in its systems to send the new payments, meaning it will directly deposit the money based on that information. If that's changed, the financial institution should let the IRS know that account is closed. In those cases, the IRS then will send the EIP 2 as a check or debit card via the U.S. Postal Service.

If your first COVID-19 relief money was directly deposited and you don't receive a direct deposit of EIP 2 by early January, the IRS says to watch your 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.

6. If I get a debit card, what will it look like? The plastic version of EIP 2 will arrive as an Economic Impact Payment card. It's 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.

You can find more information about the cards EIPcard.com.

7. Do I get a second chance at EIP 2 — or the first round of COVID stimulus money, for that matter — if I didn't/don't get an automatic payment? Even if you don't automatically get an economic impact payment in the next few weeks, if you meet the eligibility requirement you might be able to get the relief money when you file a 2020 tax return next year. This second chance at coronavirus cash also applies to the first (larger) round of economic impact payments created in March by the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The economic impact payments, both the original $1,200 per person and subsequent $600 per person amounts, actually are advance tax credits for the 2020 tax year. But since Uncle Sam wanted to get the money into people's pockets as soon as possible, the IRS used and is using 2019 filing data to issue the money.

If, however, your actual 2020 AGI means you qualify for the credit — or for more of it if you didn't get the maximum amount based on your prior tax filing — you can file for the economic impact payment equivalent known as the Recovery Rebate Credit (RRC). You'll claim this new tax credit when you complete and submit your 2020 federal income tax return in 2021.

Recent college graduates are among those who definitely need to look into claiming the RRC next filing season. Even though they may have been tax dependents of their parents, their age meant their folks weren't eligible for the EIP dependent amounts. Now these new grads can use their own earnings to qualify for the relief.

Every taxpayer will find the option to claim the RRC on Form 1040 or Form 1040-SR used by older filers. Your tax software or tax preparer should be able to help you file for this credit. The letter you received in connection with your

8. What if Congress and the White House ultimately agree on a larger COVID-19 payment? Congress is still haggling over the possibility of another relief payment that could be as much as $2,000 per person. The IRS says if additional legislation is enacted to provide for an additional amount, the EIPs that have been issued will be topped up to the larger amount as quickly as possible.

Be patient: Finally, while the IRS knows everyone is anxious to get their EIP 2 money, please be patient.

I know that's hard for way too many of us. Mortgage and rent payments are due. Bills keep coming. And while $600 won't nearly cover all your costs, any amount right now is welcome. But it would be more welcome sooner.

The IRS is trying to make that happen. Yes, the agency has a system in place, so distribution should go a bit more smoothly than it did during the first COVID-19 relief payments. But as we all know, stuff happens.

Plus, the IRS is working to get its systems ready for the 2021 filing season, which if things go as planned will start in late January.

"We are working swiftly to distribute this second round of payments as quickly as possible," said IRS Commissioner Chuck Rettig. "We urge everyone to visit IRS.gov in the coming days for the latest information on these payments and for important information and assistance with filing their 2021 taxes."

Those IRS economic impact payment pages, which the agency says will be updated as information becomes available, include IRS.gov/eip, the online status tracking tool IRS.gov/GetMyPayment (which should be available later this week and general COVID-19-related tax info at IRS.gov/Coronavirus.

You also can find a collection of coronavirus tax posts here on the ol' blog at the yellow highlighted link in the red box below.

Finally, stay safe! Wear a mask when you leave your home. Practice social distancing. And get a vaccine as soon as it's available in your area.

You don't want to have to spend any of your COVID-19 EIP money on pandemic related expenses!

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