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Tax guidance related to the Coronavirus (COVID-19) pandemic will be updated here as new information is made available through the U.S. Department of the Treasury and the IRS. You can also visit the Coronavirus Tax Relief and Economic Impact Payments page on IRS.gov.

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American Rescue Plan Act of 2021 (March 12, 2021)

The IRS and TAS are reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021 (ARP Act). Additional information about the tax related provisions will be made available on our site as well as IRS.gov, as this process is completed.

For a short summary of Individual tax changes, by tax year, under the ARP Act, see our Tax Tip.

Recovery Rebate Credit & Economic Impact Payments

2021 Recovery Rebate Credit & Third Round of Economic Impact Payments

2021 Overview

Section 9601 of the American Rescue Plan Act of 2021, enacted March 11, 2021, established Internal Revenue Code (IRC) 6428B, which provides a 2021 Recovery Rebate Credit (RRC) which can be claimed on the 2021 Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Income Tax Return for Seniors. It also provides for an advanced payment of the RRC in calendar year 2021 through payments that are referred to as Economic Impact Payments (EIP3).

This COVID-19 pandemic-related relief is similar to what other tax laws did for certain individual taxpayers in 2020, but with slightly different monetary amounts and eligibility criteria. For details on what rules are in effect for the 2020 tax year, see 2020 Recovery Rebate Credit & Economic Impact Payments.

2021 Recovery Rebate Credit

If you do not receive the full amount of EIP3 before December 31, 2021, claim the 2021 Recovery Rebate Credit (RRC) on your 2021 Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Income Tax Return for Seniors.

The 2021 RRC amount is $1,400 (or $2,800 in the case of a joint return), plus an additional $1,400 per each dependent of the taxpayer, for all U.S. residents with adjusted gross income up to a phase-out threshold of $75,000 ($150,000 in the case of a joint return or a surviving spouse, and $112,500 in the case of a head of household), who are not a dependent of another taxpayer and have a work eligible Social Security number (SSN).

Married taxpayers filing jointly where one spouse has a work eligible SSN and one spouse does not are eligible for a payment of $1,400, in addition to $1,400 per each qualifying dependent with a valid SSN or Adoption Taxpayer Identification Number issued by the IRS. The rebate amount is phased out above certain income levels.

More detailed information about when and how to claim the RRC on the 2021 individual tax forms will be provided prior to the opening of the next filing season.

2021 Economic Impact payments

The 2021 Economic Impact Payments (EIP3) are advanced payments of the 2021 RRC. The IRS started issuing the EIP3 to eligible individuals in phases in March of 2021. EIP3 will be sent each week to eligible individuals throughout most of the calendar year 2021 by direct deposit or mailed as a check or a debit card as the IRS continues to process tax returns.

EIP3 payments are separate from EIP1 and EIP2 payments, which are advance payments of the tax year 2020 RRC. For more information on the 2020 RRC or 2020 EIPs, see the 2020 Recovery Rebate Credit & Economic Impact Payments section.

How do I get an Economic Impact Payment in 2021?

No action is needed by most qualified taxpayers to receive the EIP3. Most of the 2021 EIP3s will be automatic and will be made through direct deposit, although some taxpayers will receive a check or debit card in the mail. The form of payment for EIP3s may differ from the first and second rounds of EIP.

Generally, only people who qualify for the RRC, but don’t normally file a tax return and don’t receive federal benefits will not receive advanced payments and will need to file a 2021 tax return and claim the full amount of RRC at that time.

Taxpayers can check the Get My Payment tool on IRS.gov to see the payment status of the EIP3. You can find help for using this tool under Frequently Asked Questions. Where’s My Refund and Online Account will not provide the status of your EIP3. Get My Payment is the only option available to get your payment status.

More detailed information about EIP3s can be found on the following IRS.gov pages:

Watch for further EIP3 and 2021 RRC updates on IRS.gov and here as the year progresses. The Taxpayer Advocate Service will also be sharing updated information on our News and Information page as new information becomes available.

2020 Recovery Rebate Credit & the First and Second Rounds of Economic Impact Payments

2020 Overview

The Coronavirus Aid, Relief, and Economic Security (CARES) Act established Internal Revenue Code (IRC) section 6428, 2020 Recovery Rebates for Individuals, which can be claimed on tax year 2020 Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Income Tax Return for Seniors.

The law also provided for an advanced payment of the Recovery Rebate Credit (RRC) in calendar year 2020. These payments are referred to as Economic Impact Payments (EIP1s). IRC section 6428(f)(3) provides that EIP1s cannot be made or allowed after Dec. 31, 2020. The IRS deadline for individuals to register for an EIP1 was Nov. 21, 2020. Therefore, beginning Jan. 1, 2021, taxpayers who did not receive an EIP1 during 2020 or received an amount less than the amount to which they are entitled can claim the RRC on tax year 2020 Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Income Tax Return for Seniors.

In December 2020, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 became law, allowing a second round of advanced payments (EIP2). The EIP2 initial direct deposit payments began on December 29, 2020 with official payment date of January 4, 2021. The IRS began mailing paper checks on December 30, 2020. There is no action required by eligible individuals to receive this second payment, unlike some taxpayers who had to take action under the first EIP process.

In order to claim the 2020 RRC for any additional amount a taxpayer is entitled to but did not receive as an advanced payment, both EIP1 and EIP2 need to be reported on the Recovery Rebate Credit Worksheet contained in the 2020 Form 1040 and Form 1040-SR instructions.

More information can be found below about the:

  • RRC to be claimed on the 2020 Form 1040 or Form 1040-SR individual federal income tax returns filed in 2021;
  • EIP1 issued during calendar year 2020 and EIP2 which the IRS began issuing on December 29, 2020.

2020 Recovery Rebate Credit

The 2020 Recovery Rebate Credit (RRC) is established under the CARES Act. If you didn’t receive the full amount of the recovery rebate credit as EIPs, you may be able to claim the RRC on your 2020 Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors.

The eligibility criteria for the RRC is generally the same as for EIPs, except that the RRC is based on tax year 2020 information, instead of the tax year 2019 or tax year 2018 information used for EIP1 and tax year 2019 information used for EIP2.

(Note: the 2020 versions of these tax forms can be located on the IRS Forms and Publications site or through the Electronic Filing Options for Individuals page.)

RRC issues after the 2020 tax return is filed

The IRS is mailing letters to some taxpayers who claimed the 2020 credit and may be getting a different amount than they expected. When the IRS processes a 2020 tax return claiming the credit, the IRS determines the eligibility and amount of the taxpayer’s credit based on the 2020 tax return information and the amounts of any EIP previously issued. If a taxpayer is eligible, the credit will be reduced by the amount of any EIPs already issued to the taxpayer.

If there’s a mistake with the credit amount on Line 30 of the Form 1040 or Form 1040-SR, the IRS will calculate the correct amount, make the correction and continue processing the return. If a correction is needed, there may be a slight delay in processing the return and the IRS will send the taxpayer a letter or notice explaining any change.

Taxpayers who receive a letter or notice saying the IRS changed the amount of their 2020 credit should read the letter or notice. Then they should review their 2020 tax return, the requirements for the credit and the worksheet in the Form 1040 and Form 1040-SR instructions.

If you believe the amount is incorrect after receiving an IRS letter or notice and checking the 2020 eligibility rules and calculation, see 2020 Recovery Rebate Credit — Topic G: Correcting issues after the 2020 tax return is filed, which provides additional information to explain what errors may have occurred. Taxpayers who disagree with the IRS calculation should review their letter or notice as well as the questions and answers for what information they should have available when contacting the IRS.

For more information, visit IRS.gov/rrc and the frequently asked questions by topic.

Generally, this credit will increase the amount of your tax refund or lower the amount of the tax you owe. The EIPs paid during 2020 or during January 2021 are not taxable to you for federal income tax purposes, but because they are an advance payment of the RRC, they will reduce any RRC that you can claim on your 2020 Form 1040 or 1040-SR.

You do not need to complete any information about the RRC on your 2020 Form 1040 or Form 1040-SR if you already received the correct amounts of EIP1 and EIP2 to which you are entitled.

If you are claiming the RRC because you did not receive either EIP or did not get the full amount, you have to file a 2020 individual income tax return on Form 1040 or Form 1040-SR in 2021, even if you don’t have a filing obligation. If you received Notice 1444 or Notice 1444-B for one or both rounds of the EIPs, keep them for your 2020 tax records. You’ll need the amount of the payment(s) in the notice(s) when you file in 2021.

See the IRS 2020 Form 1040 instructions for more information.

How do I get my 2020 Recovery Rebate Credit?

If you already received the full amount of your RRC via the first round or second rounds of EIPs, you don’t need to take any action.

You may be able to claim the RRC only if EIPs received are less than the amount of the RRC to which you are eligible. This happens when:

  • You are eligible but were not issued an EIP1, an EIP2, or neither an EIP1 or EIP2, or
  • Your EIP1 was less than $1,200 ($2,400 if married filing jointly) plus $500 for each qualifying child you had in 2020; or
  • Your EIP2 was less than $600 ($1,200 if married filing jointly) plus $600 for each qualifying child you had in 2020.

You don’t qualify for the RRC if, for EIP1:

  • You received $1,200 plus $500 for each qualifying child you had in 2020, or
  • You’re filing a joint return for 2020 and together you and your spouse received $2,400 plus $500 for each qualifying child you had in 2020.

And for EIP2:

  • You received $600 plus $600 for each qualifying child you had in 2020, or
  • You’re filing a joint return for 2020 and together you and your spouse received $1,200 plus $600 for each qualifying child you had in 2020.

Claim the RRC on your 2020 Form 1040, Individual Income Tax or Form 1040-SR, U.S. Tax Return for Seniors. The 2020 Form 1040 instructions will include a worksheet you can use to figure the amount of any RRC for which you are eligible. For more details about claiming this credit, visit the Recovery Rebate Credit page on IRS.gov or follow the form’s instructions.

(Note: the 2020 versions of these tax forms can be located on the IRS Forms and Publications site or through the Electronic Filing Options for Individuals page.)

2020 Economic Impact Payment Information

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.

Additional Economic Impact Payment Information

Filing A Tax Return for the EIP

2020: You can no longer file a tax return or use the Non-filer tool to claim either 2020 Economic Impact Payment (EIP) amount. Instead, if you are eligible but did not receive the full amount of Recovery Rebate Credit (RRC) allowed as advanced EIP, you must claim it on the 2020 Form 1040 or Form 1040-SR. See the 2020 Recovery Rebate Credit section above for more details.

2021: See the 2021 Recovery Rebate Credit and 2021 EIP sections above.

How Do I Know When I Will Get My Third Round of EIP?

Taxpayers can use the “Get My Payment tool” application to check your EIP3 payment status.  The tool is available in English and Spanish.

  • The Get My Payment tool will let you confirm A payment has been processed, a payment date is available, and payment is to be sent either by direct deposit or mail. Note: mail means you may be issued a debit card or a paper check.

 or

  • You are eligible, but a payment has not been processed and a payment date is not available.

You may also see other status messages; for more information about what you may see on the tool and what those messages mean, visit Get My Payment Frequently Asked Questions.  Since the tool is updated once per day overnight, there’s no need to check more than once per day.

Special note: The first and second EIPs no longer appear in the Get My Payment tool.

EIP Payment Letters

For security reasons, Notice series 1444 is generally sent to each taxpayer’s last known address within 15 days after the payment is made. This is the same for all EIPs. The notice provides information on the payment amount and how it was made.

Reminder: Be sure to keep copies of your IRS Notices for your records. If you are claiming the RRC, you may need to refer to the EIP amounts on the Notices when claiming the RRC on your tax returns.

Non-Receipt of an EIP

If you did not receive an EIP payment, but did get Notice 1444, visit the IRS’s Economic Impact Payments page, look for the EIP Frequently Asked Questions and Answers pages, and then under the section titled Payment Issued but Lost, Stolen, Destroyed or Not Received, follow the applicable instructions. Note the EIP FAQ pages are separated for the EIP1, EIP2, and EIP3 payments, so make sure you are looking at the correct page for the EIP you are missing.

If you didn’t receive your 2020 EIPs, and a 2018 or 2019 joint return was filed in your name without your consent, see If You Didn’t Get Your EIP, Your Joint Return May Be the Reason Why for steps to take to claim the RRC on your 2020 tax return.

If you only received half of the 2021 EIP3 amount expected, see the Get My Payment Frequently Asked Questions, and under the section titled Missing Payments, see the question titled: We received the third Economic Impact Payment, but it was only half the amount we’re eligible for. When will we get the second half?.

EIP/COVID-19 Scams

A variety of criminals looking to take advantage of unsuspecting taxpayers abound and there are numerous EIP and other financial schemes being marketed to taxpayers. These scams can involve setting up fake charities soliciting donations for individuals, false claims to help you get an EIP faster, and many others. Monitor the IRS Tax Scams/Consumer Alerts page for the latest information.

Coronavirus-related scams should be reported to the National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or submitted through the NCDF web Complaint Form. Taxpayers can also report fraud or theft of their EIPs to the Treasury Inspector General for Tax Administration (TIGTA). Reports can be made online.

More Information

  • Keep your address up-to-date with the IRS. If you’ve moved since filing your last tax return, you should notify the IRS by following the information for Address Changes. You should also notify the Post Office serving your old address. See why in our Tax Tip.
  • Economic Impact Payment received by check – Lost, Stolen or Destroyed. How do I get a new one?
    If the IRS issued your payment by check and it was either lost, stolen, or destroyed, you should request a payment trace. See the IRS Economic Impact Payment Information Center page, locate the Payment Issued but Lost, Stolen, Destroyed or Not Received section under the corresponding EIP Frequently Asked Question page (i.e., FAQ EIP1, FAQ EIP2, or FAQ EIP3) for more information on how to request a payment trace.

Visit the IRS Economic Impact Payment Information Center for more details on Economic Impact Payments.

Other Individual COVID-19 Related Credits and Deductions

Special $300 charitable contribution deduction on 2020 tax returns

The Coronavirus Aid, Relief and Economic Security (CARES) Act includes several temporary provisions designed to help charities. The special $300 charitable contribution deduction allows for a deduction from income of charitable cash donations of up to a total of $300, made to qualifying organizations before December 31, 2020, for individuals who choose to use the standard deduction rather than itemizing their deductions.

Cash donations include those made by check, credit card or debit card. They don’t include donated services, household items, securities or other property. See our Tax Tip for more information.

Educator expense deduction for COVID-19 protective items on 2020 tax returns

The Tax Relief Act of 2020, which was enacted as part of the Consolidated Appropriations Act (2021), allows for unreimbursed expenses paid or incurred after March 12, 2020, by eligible educators for protective items to stop the spread of COVID-19 in the classroom, to qualify for the educator expense deduction.

The educator expense deduction permits eligible educators to deduct up to $250 of qualifying expenses per year ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each). Eligible educators include any individual who is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.

Eligible taxpayers claim the deduction on Form 1040, Form 1040-SR, or Form 1040-NR (attach Schedule 1 Form 1040). See the Instructions for Form 1040 and Form 1040-SR or the Instructions for Form 1040-NR for more information.

Sick and family leave tax credits for self-employed individuals

The Families First Coronavirus Response Act (FFCRA), allows eligible self-employed individuals who, due to COVID-19, are unable to work or telework for reasons relating to their own health or to care for a family member to claim refundable tax credits to offset their federal income tax. The credits are equal to either the qualified sick leave or family leave equivalent amount, depending on circumstances. IRS.gov has instructions to help calculate the qualified sick leave equivalent amount and qualified family leave equivalent amount. Certain restrictions apply.

Eligible self-employed individuals will determine their qualified sick and family leave equivalent tax credits with the new IRS Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. These can be claimed on the 2020 Form 1040 for leave taken between April 1, 2020, and December 31, 2020, and on the 2021 Form 1040 for leave taken between January 1, 2021, and March 31, 2021.

For more information, see:

Unemployment Compensation Exclusion on 2020 Tax Returns

Sec. 9042, of the American Rescue Plan Act of 2021, allows an exclusion from gross income, for tax year 2020, of up to $20,400 if married filing jointly and up to $10,200 for all other eligible taxpayers in unemployment compensation, if the adjusted gross income of the taxpayer is less than $150,000. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation (UC). If you file Form 1040-NR, you can’t exclude any unemployment compensation for your spouse.

  • For those who received UC last year and have already filed their 2020 tax return, IRS anticipates it will be able to determine the correct taxable amount of unemployment compensation and tax, and refund any resulting overpayment of tax or apply it to other outstanding taxes owed, with some exceptions. See IRS to recalculate taxes on unemployment benefits; refunds to start in May. So, there is no need for taxpayers to file an amended return unless the calculations make you newly eligible for additional federal credits and deductions not already included on the original tax return. See the example in the News Release. If you do need to file an amended return, see Amending a Tax Return.
  • For those who received UC last year, but have not filed yet, follow the IRS instructions on the New Exclusion of up to $10,200 of Unemployment Compensation page. For additional information, go to About Form 1040 to see the updated Form 1040, Instructions for Form 1040,and Schedule.

IRS People First Initiative

In 2020, the IRS postponed certain compliance actions under a program titled “IRS People First Initiative,” effective April 1 that ran through July 15, in an effort to help taxpayers facing tax challenges in light of the Coronavirus (COVID-19) pandemic. The changes included issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection procedures and limiting certain enforcement actions.

Now that the July 15, 2020 date has passed, this relief has expired and does not apply to the current year (2021)

Visit www.irs.gov/coronavirus and see the IRS Operations During COVID-19: Mission-critical functions continue page for more details about what current actions the IRS is taking as it resumes agency operations.

Businesses and Tax-Exempt Entities Financially Impacted by the Coronavirus

Need employment tax relief?

Try our COVID-19 Business Tax Relief Tool now. All you need to do is answer a few questions. It should take less than 5 minutes.

Alert: this tool and the subsequent page text below is up to date as of December 31, 2020. Updates based on any new legislation, passed after December 15, 2020, are not reflected in here yet, but will be made as soon as possible.

Based on your answers, the tool will:

  • Let you know if you may be likely to qualify for any of the available tax relief options.
  • Link you to more information that will allow you to understand how to take advantage of those options.

Or you can simply read the information below about the available tax relief options.

Please help businesses affected by the COVID-19 pandemic understand tax relief options to stay in business by sharing this flyer (PDF), the link to this page or the tool’s direct link, via your website, newsletter, email, or social media. Read our TAS Tax Tip: COVID-19 Business Tax Relief Tool for Businesses and Tax-Exempt Entities for more information about this tool, how it works and more.

Employee Retention Credit

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, is designed to encourage eligible employers to keep employees on their payroll, despite experiencing financial hardship related to the coronavirus pandemic, with an employee retention tax credit (Employee Retention Credit). The refundable credit is 50% of up to $10,000 in wages paid by an eligible employer to employees after March 12, 2020, and before January 1, 2021. For more information, see Employee Retention CreditCoronavirus Tax Relief for Businesses and Tax-Exempt Entities, Employee Retention Credit FAQs, and Deferral of employment tax deposits and payments through December 31, 2020.

Paid Leave for Workers and Tax Credits for Small- and Mid-Size Businesses

Under the Families First Coronavirus Response Act (FFCRA), businesses can claim two new refundable payroll tax credits. The paid sick leave credit and paid family leave credit are available for eligible employers who pay qualified sick leave wages and/or qualified family leave wages from April 1, 2020, through December 31, 2020, and who have fewer than 500 employees.

Paid sick leave for workers: An employer can allow a full-time employee up to 80 hours of paid sick leave. A part-time employee may be allowed paid sick leave for the number of hours the employee works over a two-week period, if the employee is unable to work or telework because they are:

  • Subject to COVID-19 quarantine or isolation order.
  • Advised to self-quarantine due to COVID-19.
  • Experiencing COVID-19 symptoms and are seeking a medical diagnosis.
  • Caring for a person subject quarantine orders related to COVID-19 or has been advised to self-quarantine.
  • Caring for a child whose school or place of care is closed or unavailable due to COVID-19.

For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, an eligible employer may receive a refundable sick leave credit.  Employers pay the benefits at 100% of the employee’s regular pay up to $511 per day and $5,110 in total for the care of the employee’s own health.

For the care of an employee’s family members, employers pay benefits at two-thirds of the employee’s regular pay up to $200 per day and $2,000 total.

Paid family leave to care for child: An employer can give up to 10 weeks of paid family leave at two-thirds of an employee’s regular pay for up to $200 per day and $10,000 total if the employee is unable to work or telework because they’re caring for a child whose:

  • School or place of care is closed due to COVID-19
  • Childcare provider is unavailable due to COVID-19

With two weeks of paid sick leave and 10 weeks of paid family leave combined, an employee could receive up to a total of 12 weeks up to $12,000 of paid leave to care for a child. For more information, see paid leave for employeesNew credits fund employers for Coronavirus-related paid leave and Tax Credits for Required Paid Leave FAQs.

Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Important note: An employer cannot use the same wages for the Employee Retention Credit and the credits for paid sick and family leave.

How do I receive my credit?

Alert: Employers will experience a delay in receiving payments associated with Form 7200, Advance Payment of Employer Credits, processed between late-December and mid-January due to standard end-of-year close out. Payment of valid requests during this time will begin to be processed on January 21, 2021.

 

You can get immediate access to the credits by reducing the employment tax deposits you are otherwise required to make. If your employment tax deposits are not enough to cover the credit, you can request advance payment from the IRS by faxing your completed Form 7200, Advance Payment of Employer Credits Due to COVID-19 to 855-248-0552. Read the instructions carefully and take time when completing this form. IRS has put together a list of common errors to avoid when filing Form 7200. For more information call 833-551-3588.

If you fully reduce your required employment tax deposits otherwise due on wages paid in the same calendar quarter to employees in anticipation of receiving the credits, and you have not paid qualified leave wages in excess of this amount, you should not file Form 7200. If you file Form 7200, you will need to reconcile this advance credit and deposits with the qualified leave wages on Form 941 (or other applicable federal employment tax return such as Form 944 or Form CT-1), and you may have an underpayment of federal employment taxes for the quarter.

Note that a Form 7200 requesting an advance of less than $25 will not be processed. Employers can claim credits of less than $25 on Form 941.

Some Employers Received Notice of Failure to Deposit Penalty after Claiming New Tax Credits

Although the IRS has taken steps to implement rules that prevent the failure to deposit penalty from incurring on employers reducing their deposits in anticipation of claiming the Sick and Family Leave Credits or Employee Retention Credit, some employers may still have inadvertently received notice of the penalty.

No additional actions are needed at this time. The IRS is working to identify these employer accounts and correct them as soon as possible. To avoid receiving a penalty notice in the future, check IRS.gov/form941 for guidance on properly reporting liabilities when reducing deposits.

Delay processing Form 7200

For those experiencing a delay with processing your Form 7200, you will receive one of the following letters from the IRS:

  • Letter 6312, if the IRS either rejected Form 7200 or made a change to the requested amount of advance payment due to a computation error. The letter will explain the reason for the rejection or, if the amount is adjusted, the new payment amount will be listed on the letter.
  • Letter 6313, if the IRS needs written verification that the address listed on your Form 7200 is the current mailing address for your business. The IRS will not process Form 7200 or change the last known address until the verification is provided.

Repaying excess employment tax credits, when necessary

The IRS recently provided guidance on recapturing excess employment tax credits where any refund of these credits listed above were paid to a taxpayer that exceeds the amount the taxpayer is allowed. This situation is considered an erroneous refund for which the IRS has been authorized to seek repayment. See the temporary regulation and a proposed regulation for how to reconcile advance payments of refundable employment tax credits and recapture the benefit of these credits when necessary.

For more information on the employer credits overall, see Employer Tax Credits and Employer Credit Flow Chart.

Deferral of Certain Employee Social Security Tax Withholding and Payment

The President of the United States issued a Presidential Memorandum directing the Secretary of the Treasury to use his authority pursuant to section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain payroll tax obligations. As a result, the Department of Treasury and the Internal Revenue Service issued guidance allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax, if the employee’s wages or compensation are below a certain amount. The guidance makes relief available for employers and generally applies to wages or compensation paid starting September 1, 2020, through December 31, 2020.

The employee Social Security tax deferral may apply to payments of taxable wages or compensation to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages or compensation of $4,000 or above for a bi-weekly pay period.

Payment of Deferred Social Security Tax Withholding

An employer must withhold and pay the total applicable taxes that were deferred under this guidance, ratably from employee wages and compensation paid between January 1, 2021 and April 30, 2021. If not, interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid applicable taxes. If necessary, the employer may make arrangements to otherwise collect the total applicable taxes from the employee.

For more information see:

Business Net Operating Losses (NOLs)

For information about business-related Net Operating Losses, see the section below titled Net Operating Losses (NOLs).

Business Closures

Closing your business can be a difficult and challenging task. The Taxpayer Advocate Service (TAS) partnered with IRS to expand its Closing a Business page to help business owners understand the specific actions needed, from a federal tax perspective, for each type of business.

More Resources

For more information, see the Coronavirus Tax Relief for Businesses and Tax-Exempt Entities or New Employer Tax Credits pageson IRS.gov. You can also visit the Department of Labor’s website, Families First Coronavirus Response Act: Questions and Answers.

Net Operating Losses

COVID Relief for Taxpayers Claiming Net Operating Losses (NOLs)

Revenue Procedure 2020-24 provides guidance to taxpayers with net operating losses (NOLs) that are carried back under the Coronavirus Aid, Relief, and Economic Security (CARES) Act by providing procedures for:

  • waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021,
  • disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and
  • waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

In Notice 2020-26, the IRS grants a six-month extension of time to file Form 1045, Application for Tentative Refund, or Form 1139, Corporation Application for Tentative Refund, as applicable, with respect to the carryback of a NOL that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019. Individuals, trusts, and estates would file Form 1045, and corporations would file Form 1139.

COVID Relief for Partnerships with NOLs. Revenue Procedure 2020-23 allows eligible partnerships to file amended partnership returns using a Form 1065, U.S. Return of Partnership Income, by checking the “Amended Return” box and issuing amended Schedules K-1, Partner’s Share of Income, Deductions, Credits, to each of its partners. Partnerships filing these amended returns should write “FILED PURSUANT TO REV PROC 2020-23” at the top of the amended return.

Special temporary procedures for submission of certain NOL forms

In response to the COVID-19 pandemic and solely to implement the provisions of the CARES Act, starting on April 17, 2020 and until further notice, the IRS is implementing temporary procedures for the fax submission of certain Forms 1139 and Forms 1045.

For more information, see the IRS’s frequently asked questions and answers at “Temporary procedures to fax certain Forms 1139 and 1045 due to COVID-19.

 

Retirement Plans Relief

The Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 (CARES Act), provides relief to eligible individuals taking withdrawals or loans from qualified employer retirement plans and Individual Retirement Arrangements (IRAs).

Coronavirus-related withdrawals and loans

Individuals may be eligible for coronavirus-related relief on withdrawals from qualified employer retirement plans or IRAs and on loans from qualified employer retirement plans. The relief only applies to certain withdrawals and loans made to the following individuals:

  • The individual is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention;
  • The individual’s spouse or dependent is diagnosed with such virus or disease by such a test;
  • The individual experiences adverse financial consequences as a result of:
    • being quarantined, being furloughed or laid off, or having work hours reduced due to such virus or disease;
    • being unable to work due to lack of childcare due to such virus or disease; or
    • closing or reducing hours of a business owned or operated by the individual due to such virus or disease;
  • Other categories of individuals that that IRS may provide in future guidance.

Withdrawals: For withdrawals made in 2020 before December 31, 2020, eligible individuals may be able to request coronavirus-related withdrawals of up to an aggregate limit of $100,000 from their qualified employer retirement plans and IRAs. These coronavirus-related withdrawals:

  • Are not subject to the 10-percent additional tax on early distributions that would otherwise apply to most withdrawals before reaching age 59½.
  • May be repaid to a qualified employer plan or IRA within three years.
  • The tax due on withdrawals can be paid over three years.

Loans: Eligible individuals may also, until September 22, 2020, be able to request a plan loan in an increased amount from their qualified employer retirement plan account, if their plan allows. In general, the CARES Act increased the Internal Revenue Code limit on plan loans to eligible individuals from the lesser of $50,000 or 50 percent of the vested account balance to the lesser of $100,000 or 100% of the vested account balance. Loans are not available from an IRA.

For eligible individuals, plan administrators can suspend, for up to one year, plan loan repayments due from March 27, 2020 to December 31, 2020. A suspended loan is subject to interest during the suspension period, and the term of the loan may be extended to account for the suspension period.

Taxpayers should check with their plan administrator to see if their plan offers these expanded loan options and for more details about these options.

Seniors, retirees not required to take distributions from retirement accounts this year under new law

The CARES Act, waives required minimum distributions (RMDs) during 2020 for IRAs and retirement plans, including beneficiaries with inherited accounts. This waiver includes RMDs for individuals who turned age 70 ½ in 2019 and took their first RMD in 2020. Roth IRAs do not require withdrawals until after the death of the owner.

If an individual has already taken an RMD in 2020, the individual will have the option of returning the distribution to their account or other qualified plan. RMDs taken in 2020 are considered eligible for rollover and can be rolled over to another IRA, another qualified retirement plan, or returned to the original plan.

An IRA owner or beneficiary who has already received an RMD in 2020 can also repay the distribution to the distributing IRA no later than Aug. 31, 2020, to avoid paying taxes on that distribution.

IRS Notice 2020-51 (PDF) also provides that the one rollover per 12-month period limitation and the restriction on rollovers to inherited IRAs do not apply to this repayment.

The CARES Act provisions apply to most retirement plans, profit sharing plans and other defined contribution plans. The RMD suspension does not apply to qualified defined benefit plans.

For more information visit:

See also the Individual Retirement Accounts (IRAs) and workplace-based retirement plans section of the Filing and Payment Deadlines Questions and Answers, or Coronavirus Tax Relief and Economic Impact Payments.

Additional Resources

International Coronavirus Relief

Economic Impact Payment

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) legislation includes the Economic Impact Payments distributed by the IRS. Information in the Economic Impact Payment section above, includes information for international situations.

See also, the IRS’s Economic Impact Payment Information Center FAQs for specifics for people living in U.S. Territories and a special exception for U.S. Armed Forces members.

Filing and Payment Relief

The Treasury Department and the IRS announced new tax relief due to the Coronavirus (COVID-19). U.S. taxpayers who live and work abroad have until July 15, 2020 to file federal income tax returns and pay their federal income tax. For more details, see the information under the Filing and Payment section above. If you need additional information about your tax responsibilities or and return filing requirements, see our Tax Responsibilities of U.S. Citizens and Resident Aliens Living Abroad, page.

Foreign Account Tax Compliance Act

The IRS provides an extension of time, for a Reporting Model 2 Foreign Financial Institution (FFI) or a Participating FFI, to file the Foreign Account Tax Compliance Act (FATCA) Report (Form 8966) to the IRS. The filing deadline for the FATCA Report was extended from March 31, 2020 to July 15, 2020. Form 8809-I, Application for Extension of Time to File FATCA Form 8966, will not be required for this extension.

For more information, see the “Reporting” category on the FATCA – FAQs General page.

Net Operating Loss

The IRS issued temporary instructions to fax certain Forms 1139, Corporation Application for Tentative Refund, and 1045, Application for Tentative Refund, due to COVID-19, that allow for digital transmission of these forms. See the news release for details about eligible refund claims. For more details about modifications to net operating loss rules made by the CARES Act, see the information under the Net Operating Loss section above.

Passport Certifications

The IRS suspended new certifications to the Department of State for taxpayers who have “seriously delinquent tax debt” through July 15, 2020. Those taxpayers were encouraged to submit a request for an Installment Agreement or, if applicable, an Offer in Compromise during this period to avoid certification. Upon the IRS certification of seriously delinquent tax debt, the Department of State generally will not issue a passport and may deny the taxpayer’s passport application or revoke his or her current passport.

For a detailed information about revocation or denial of passport in case of certain unpaid taxes, see Revocation or Denial of Passport in Case of Certain Unpaid Taxes.  For more information and how to request decertification, see the Frequently Asked Questions and Answers.

TAS and IRS Operational Status

TAS OPERATIONAL STATUS

The Taxpayer Advocate Service (TAS) remains committed to assisting taxpayers and championing their taxpayer rights. TAS will continue to offer help to qualified taxpayers. You can also visit our TAS Tax Tips and Get Help center for help with common tax questions.

Check this page frequently for updates.

Current Status

Taxpayer Advocate Service (TAS) employees are teleworking, sheltering at home and working to serve our taxpayers. We are experiencing delays and interruptions in working cases due to IRS services being limited. These limited services are also causing a high call volume to our organization resulting in delays in our response times. Please be patient.

For questions about Economic Impact Payments, please go to the IRS Coronavirus Relief site, call the EIP help line at 800-919-9835, or visit our TAS Coronavirus (COVID-19) Tax Relief site first.

IRS OPERATIONAL STATUS

To protect the public and employees, and in compliance with orders of local health authorities around the country, certain IRS services are extremely limited or suspended until further notice.

To get the latest updates on the status of IRS Operations and see details about what the IRS is or is not currently working, visit IRS Operations During COVID-19: Mission-critical functions continue and see also the People First Initiative – Providing Relief to Taxpayers Frequently Asked Questions and Answers page. We recommend checking this IRS page frequently for updates.

TAS Customer Case Alerts

General Tax-Related Topics

Tax Filing

Visit the IRS’s File page for tax filing information and resources. Free tax return filing options are available for some individuals. You can also visit our Get Help Filing Returns page too.

Important note: For most 2020 Individual tax returns the filing and payment deadline is extended to May 17, 2021. For more detailed information, see TAS Tax Tip: Key federal filing season dates and information and IRS.gov Tax Day for individuals extended to May 17.

Refunds

Please be aware that, due to COVID-19, the IRS is experiencing delays in processing some tax returns. Visit IRS Operations During COVID-19: Mission-critical functions continue for more information. If you have questions about your tax refund status after you’ve filed, visit IRS’s Where’s My Refund? page or TAS’s refund information hub for general help and information about refunds.

Tax Balance Due/IRS Notice Delays

If you owe a federal tax balance due and cannot pay, take a look at our Get Help Paying Taxes page or IRS’s Paying Your Taxes page for information about payment options available.

Please be aware that the IRS continues to experience delays mailing backlogged notices to taxpayers, this includes payment due notices. Delayed notices should have an insert with information to follow if you receive one. See the IRS Operations During COVID-19: Mission-critical functions continue or the Mailing of IRS notices delayed due to ongoing pandemic for more details.

TAS Resources

Visit the TAS Tax Tips and Get Help center for help with common tax questions. Or our Contact Us page to see what kind of cases we can help with and how to request assistance.