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Second COVID-19 Economic Stimulus Payment – Eligibility & How to Get It

On Dec. 29, 2020, President Donald Trump signed a $900 billion coronavirus stimulus package into law. It was the fourth piece of COVID-19 stimulus legislation to become law in the United States since the pandemic hit and the second to include stimulus checks — which the IRS calls “economic impact payments” — for most Americans.

According to CNN, this latest piece of legislation allocates $600 in stimulus funds to most American adults earning $75,000 adjusted gross income (AGI) or less, $1,200 per couple earning $150,000 AGI or less, and $600 per qualifying minor dependent. Above those income thresholds, payments step down by $5 for each additional $100 in eligible income until they phase out entirely. Americans who do not normally file tax returns are eligible to receive these stimulus payments, though they may be required to file simple informational tax returns to claim the funds.

The latest COVID relief measure follows up an initial round of larger stimulus checks that allocated $1,200 to adults earning $75,000 AGI or less, $2,400 to couples earning $150,000 AGI or less, and $500 per qualifying minor dependent. And it may not be the last batch before the pandemic ends.

Shortly after passing the spending bill Trump signed on Dec. 29, the U.S. House of Representatives passed another stimulus measure that would replace the $600 checks with $2,000 checks, subject to the same income restrictions and phaseout formula. It’s unclear what the Republican-controlled Senate will do with the measure, but Trump is expected to sign if and when it clears the Senate. Fortunately for Americans counting on the second round of checks to top up their bank accounts after the holidays, this second measure’s passage shouldn’t significantly affect the timing of the second round of stimulus payments — only their size.

Are You Eligible for the Second Round of Stimulus Checks?

The vast majority of American adults and children are eligible for the second round of payments passed in December 2020. Not all adults will receive the full $600 allotment per qualifying individual, and — as was the case with the first round — some won’t receive any payment at all due to income restrictions.

Regardless of your income or the amount you receive, you won’t need to pay income taxes on that amount or even claim your payment on your federal tax return. However, eligible recipients who typically don’t file tax returns (or didn’t file in 2018 or 2019) may need to file at least a simple return to ensure receipt. Refer to updated IRS guidance to determine whether you need to file.

Income Limits & Phaseouts for the Second COVID-19 Economic Impact Payments

During the second round of COVID-19 economic impact payments passed by U.S. lawmakers, the maximum AGI thresholds to receive the full $600 payment per individual remain the same:

  • $75,000 for single filers
  • $112,500 for head-of-household filers
  • $150,000 per couple for joint filers

The phaseout formula remains the same as well. However, because the starting point is lower, the final phaseout threshold is lower than the first round’s:

  • $87,000 for single filers
  • $124,500 for head-of-household filers
  • $174,000 per couple for joint filers

As with the first round of stimulus checks, the IRS will use 2019 income (if available) to determine eligibility and calculate payment amounts. If 2019 income is not available, the IRS may default to 2018 income.

If you lost your job or saw a reduction in income in 2020, your eligibility or payment amount won’t change at all. Americans receiving extended unemployment benefits or other forms of COVID-related financial aid, such as Paycheck Protection Program loans, are eligible for this round of stimulus payments as long as their 2019 income qualifies.

Economic Impact Payments for Children in the Second Round of COVID-19 Stimulus

Minor dependents (children age 17 and under) are eligible to receive $600 per individual in the second round of COVID-19 impact payments. That’s a $100 increase per child over the $500 payments provided by the Coronavirus Aid, Relief, and Economic Security Act (the first stimulus package featuring direct payments to citizens). As with the second round of payments to adults, the phaseout formula and process for children remain the same as in the first round.

How & When to Expect Your Second COVID Stimulus Payment

The IRS’s preferred delivery method for this round of stimulus checks is electronic (direct deposit), not paper checks. But the IRS needs up-to-date bank account information for any recipient who’d like to receive payments by direct deposit. If you haven’t yet filed your 2018 or 2019 taxes and don’t want to wait weeks to receive a paper check, you may need to take action.

How to Receive Your Stimulus Payment Electronically

First, the good news: If the IRS has up-to-date bank account information for you, your stimulus payment should arrive sometime during the first half of January 2021. The IRS has indicated its intention to send electronic payments to eligible recipients no later than Jan. 15, 2021. If you received your first stimulus payment electronically and your bank information hasn’t changed, the second payment should hit that account soon.

If the IRS doesn’t have current financial account information for you and you haven’t filed (or don’t plan to file) a 2019 return, use the Get My Payment tool linked from the IRS’s coronavirus information page to provide it. The process should take less than five minutes — you just need to confirm your most recent AGI and your refund or tax-owed balance.

How to Receive Your Stimulus Payment by Paper Check or Prepaid Card

If you don’t mind (or prefer) receiving your stimulus payment by paper check or prepaid card, you shouldn’t need to take action right now unless the IRS does not have your current address on file. If you’ve moved since filing your most recent federal tax return, complete and mail Form 8822 (the agency’s official change-of-address form). Confirm you’re sending it to the appropriate IRS mailing address, which is on Page 2 of the form.

If you didn’t file a federal income tax return in 2018 or 2019 and have changed addresses since your last filing, you may need to file a simple federal tax return. Use a free tax filing resource to avoid out-of-pocket costs for this step.

When to Expect Your Stimulus Payment

Direct-deposited stimulus payments should arrive in most accounts by the middle of January 2021. Paper checks and prepaid cards could take weeks longer to arrive.

If you’re concerned your stimulus payment might be missing or lost in the mail, use the Get My Payment tool in the IRS Economic Impact Payments portal to confirm you’re eligible and get an estimated arrival date.

After the IRS sends your payment, you’ll receive a written notification explaining how and when. If this notification arrives before your payment, contact the IRS for more information.

Final Word

Democrats and Republicans don’t agree on much these days. But the parties’ respective leaders — Speaker of the House Nancy Pelosi, President Joe Biden, Senate Majority Leader Mitch McConnell, and outgoing President Donald Trump — have cooperated on several significant pieces of stimulus legislation since the coronavirus outbreak began.

They might not be done. Although the end of the pandemic’s acute phase is within sight, the economy has a long road to recovery, and the federal government might need to do more to ensure that recovery remains on track. A bipartisan effort to increase the second round of stimulus payments to $2,000 per individual presents an early test of this commitment.

In the meantime, Americans can count on some relief from the forthcoming $600 payments. If you’re eligible, you can safely begin thinking about what you’ll do with your stimulus check.

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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