The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) legislation allows a first round of Economic Impact Payments, distributed during calendar year 2020 before December 31, by the Internal Revenue Service as an advance payment of the Recovery Rebate Credit (RRC). These payments were automatically issued, except for taxpayers who normally are not required to file a tax return. Taxpayers who normally are not required to file were given the opportunity through November 21, to either file a simplified tax return or used a special Non-Filers: Enter Payment Info Here tool to claim a payment.
This round of EIPs for taxpayers with existing direct deposit information on file began the week of April 13, 2020 and in most instances, payments continued to be issued until December 31, 2020.
The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 allows for an additional second round of EIP payments (EIP2). These payments are available starting January 4, 2021 and will be issued until mid-January.
EIP2 payments are also automatic for eligible taxpayers who filed a 2019 tax return, those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits as well as Supplemental Security Income (SSI), and Veterans Affairs beneficiaries who didn’t file a tax return. Payments are also automatic for anyone who successfully registered for the first EIP online at IRS.gov using the agency’s Non-Filers tool by November 21, 2020 or who submitted a simplified tax return that has been processed by the IRS.
See IRS.gov’s Economic Impact Payments page, this IRS Statement or Questions and Answers about the Second Economic Impact Payment for more details.
Who Is Eligible and For What Amount?
First Round of EIPs (April to December 2020)
Based on the 2018 or 2019 tax return information, eligible taxpayers could qualify for up to $1,200 each, or up to $2,400 if married filing jointly, and up to $500 for each qualifying child.
A qualifying child is one claimed as a dependent on the last filed tax return, tax year 2019 or tax year 2018, and who won’t reach age 17 by Dec. 31, 2020. This is the same criteria used to determine eligibility for the Child Tax Credit.
The gross amount, based on either the 2018 or 2019 tax returns, of the payment is reduced by $5 for each $100 earned above $75,000 for single filers, $112,500 for head of household filers and $150,000 for married filing joint filers. Single filers with income exceeding $99,000, $136,500 for head of household filers and $198,000 for joint filers with no qualifying children aren’t eligible and won’t receive payments.
Second Round of EIPs (January 2021)
Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment of up to $600 for individuals or $1,200 for married couples filing jointly and up to $600 for each qualifying child.
Similar to the first EIP, but based on the 2019 tax return, if you have adjusted gross income not exceeding $75,000 for individuals, $112,500 for taxpayers filing as head of household, or $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced by 5 percent of the amount by which the adjusted gross income exceeds the applicable threshold mentioned above.
Who Isn’t Eligible
Ineligible taxpayers include:
- Taxpayers who were claimed as a dependent on someone else’s 2019 tax return. For example, this would include a child, student or older dependent who can be claimed on a parent’s tax return.
- Taxpayers who are considered a nonresident alien who file or would file Form 1040-NR or Form 1040NR-EZ.
- Taxpayers who don’t have an SSN that is valid for employment issued before the due date of their 2019 tax return (including any extensions).
- People who died before 2020.
- An estate or trust.
Taxpayers residing in American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and the Northern Mariana Islands.
In general, the tax authorities in these five U.S. territories will provide the Recovery Rebate Credit (RRC) to eligible residents. Territory residents should direct questions about EIPs received in 2020, January 2021, or the 2020 RRC to the tax authorities in the territories where they reside.