Most United States taxpayers are eligible for a second Economic Impact Payment, or stimulus payment, from the US government to help them cope with the economic downturn caused by the COVID-19 pandemic. Most Americans will receive the Economic Impact Payment automatically via paper check or direct deposit. Certain individuals who did not receive their stimulus payment during the first round may be eligible to claim a Recovery Rebate Credit.
How is the Economic Impact Payment Calculated?
Taxpayers will receive an Economic Impact Payment based on their adjusted gross income reported on their most recently filed tax returns. The calculation is performed as follows:
- $600 per taxpayer, or $1,200 for married couples filing jointly.
- $600 per qualifying child under age 17.
The stimulus payment is reduced by $5 for every additional $100 in adjusted gross income that is greater than:
- $150,000 for joint filers.
- $75,000 for single or married filing separately filers.
- $112,500 for heads of household.
Economic Impact Payments are structured as advance tax credits. They are not classified as a cash public benefit.
Eligibility for Economic Impact Payments
United States citizens and green card holders may be eligible to receive the Economic Impact Payment if they:
- Are not claimed as a dependent on someone else’s 2019 tax return.
- Have a Social Security Number (SSN) that is valid for employment.
- Have an annual adjusted gross income that falls within certain limits, described above.
Foreign nationals can receive Economic Impact Payments if they are:
- Green card holders or they meet the substantial presence test for the calendar year.
- Nonimmigrants that pay income taxes and are not listed as dependents on a tax return.
- Part of a mixed immigration status family where at least one member holds an SSN. SSNs are required to receive stimulus payments for children.
How to Claim your Economic Impact Payment
Taxpayers do not need to take any additional action to receive their Economic Impact Payment. The payment will be issued via paper check or direct deposit. If you have not received your payment yet, use the Get My Payment tool to confirm whether the stimulus payment is on its way.
If the Get My Payment tool indicates that the payment is on its way to a bank account number that you do not recognize, the IRS recommends continuing to monitor your bank accounts for deposits. The number displayed may be for a temporary bank account established when you filed your 2019 tax return.
Recovery Rebate Credits
If you did not receive the stimulus payment the first or second time around, or you only received a partial payment, you may be eligible to receive a Recovery Rebate Credit. This credit will generally decrease the amount of money that you owe on your 2020 taxes or increase the amount of your refund.
For help maximizing your 2020 tax savings, please contact your trusted Chugh CPAs, LLP professional.