Stimulus - Tax Season Extension - Updates
Mac Neal LLC is working around the clock to stay current on the tax law changes, stimulus updates, and tax return processing times. The IRS has a backlog of over 7 million returns from 2019. In addition, the IRS is working on processing 2020 returns and stimulus checks.
Please be patient and give the IRS time to get to your stimulus and your tax return. I personally do not have additional information about your stimulus or your tax return other than providing clarifying information on eligibility or answers as it relates to your tax return paperwork and your personal tax situation.
The IRS has instructed that we should not call regarding the stimulus at this time. The IRS has also instructed to not call and inquire about your 2020 tax refund status unless it has been more than the 21-day processing time deadline since the submission of your filing. If it is more than 21 days since your return has been processed and the “Where’s my refund?” tool does not have an update for you, feel free at that time to contact me for further advice.
IRS to Extend Filing Season
The IRS has announced that it will extend the filing season until Monday, May 17, 2021. This one-month extension is for filing and payment.
Thank you in advance for your patience while I work with my software company on the federal and state software updates related to this filing deadline change, such as due dates, payment debit dates, and filing instructions.
I will be checking closely with the IRS and state tax agencies to conform to their official guidance on this matter.
Stimulus # 3 Update
The Internal Revenue Service told financial institutions to expect roughly 90 million direct deposits amounting to $242.2 billion on March 17 in the initial distribution of the American Rescue Plan stimulus payments, according to a banking industry group.
Following the deposits, the IRS mailed an additional 150,000 checks amounting to $442 million, with a pay date of March 19, according to the Independent Community Bankers of America, based on a briefing from the IRS.
“Additional batches of payments will be sent in the coming weeks with the vast majority sent by direct deposit,” “Payments will also be sent through the mail as a check or debit card.”
The American Rescue Plan provides a third round of direct stimulus payments, up to $1,400 for individuals, $2,800 for couples, and an additional $1,400 for each dependent regardless of age.
If you haven’t received your deposit, here’s some information that may help you figure out when your money will arrive and what to do if you get your funds on a prepaid debit card.
Stimulus Q & A
What’s the maximum amount you can receive?
Individuals will receive up to $1,400, while married couples who file jointly will get up to $2,800. Additionally, dependents will receive as much as $1,400. (The IRS automatically calculates the amounts issued.)
Unlike the first two payments, families will get the stimulus checks for all dependents claimed on their tax returns. That includes adult dependents, such as college students and older relatives. Previously, only children under the age of 17 qualified.
However, if you’re in debt, you might not see some — or even all — of that money. That’s because debt collectors can garnish funds from the stimulus checks, something consumers were previously protected against.
Who qualifies for stimulus checks?
U.S. citizens or permanent residents are generally eligible for the full amount — provided they are not dependent on another taxpayer and have a valid Social Security number — if their adjusted gross incomes don’t exceed certain amounts. Those levels differ somewhat from the first two checks, so not everyone who qualified for those them will get the third one.
The eligibility amounts are as follows:
- $75,000 for individuals (including single tax filers or a married person filing separately)
- $112,500 for those filing as head of household
- $150,000 for married couples who file a joint return, or those filing as a qualifying widow or widower
Once that threshold is met, taxpayers may still be eligible to receive reduced amounts. But the stimulus checks phase out entirely for those whose adjusted gross income is over the following amounts:
- $80,000 for individuals
- $120,000 for those filing as head of household
- $160,000 for married couples filing jointly, or those filing as a qualifying widow or widower
Still unsure how much you’ll get? Try this stimulus check calculator.
How eligibility is determined?
Most people, including those who received the first two rounds of stimulus checks, likely won’t need to take further action to get this latest economic impact payment, as eligibility is determined based on information already available to the IRS.
The third round of payments will be issued to eligible people who:
- Filed a 2020 tax return (the due date will be delayed until May 17 this year)
- Filed a 2019 tax return (if the 2020 return hasn’t been submitted or processed yet)
- Didn’t file a tax return for either of those years but registered for the first stimulus check using the special non-filers portal last year
- Are, as of Dec. 31, 2020, recipients of federal benefits who don’t usually file a tax return. This group includes people who received Social Security or Railroad Retirement Board benefits, Supplemental Security Income or veteran benefits in 2020. (More information for federal benefit recipients will be provided at a date to be determined as the IRS works with the various information to update information for this year. Further details will be released at IRS.gov.)
People who didn’t file a 2019 or 2020 return, or register for the non-filers tool, can also still qualify for all three payments (provided they meet all the eligibility requirements) through the Recovery Rebate Credit. The credit can be claimed by filing a 2020 tax return. Find out how to do that here.
For married couples, what if only one spouse has a Social Security number?
Couples who file their taxes jointly are eligible for the third payment even if only one spouse has a Social Security number, as are their family members with work-eligible Social Security numbers. However, the couple will only receive up to $1,400 — not the $2,800 joint amount. Any qualifying dependent claimed on their 2020 tax return will still get as much as $1,400.
The rule is different for couples where one spouse served in the U.S. Armed Forces at any point during the taxable year. In that case, only one valid Social Security number is needed to receive up to $2,800.
What do federal benefit recipients who don’t file taxes need to get payment?
No further action will be needed to receive a direct payment for most beneficiaries of Social Security retirement and disability, railroad retirees and those who received veterans’ benefits last year. Like the first two rounds of stimulus checks, the new payments will be sent out the same way benefits are normally paid.
But there are instances where some people receiving the automatic third payment based on their federal benefits information will need to file a 2020 tax return, regardless of whether they normally don’t file one.
For instance, if your payment doesn’t include a check for your qualified dependent, and that person didn’t get one, the federal benefits recipient would need to file a 2020 tax return to be considered for the additional payment.
Also, those who are eligible but didn’t get the first or second stimulus check — or got less than the full amount — may need to file a 2020 tax return to be eligible for the 2020 Recovery Rebate Credit. More information on that can be found here.
What about payment notices from the IRS?
As with the two prior stimulus checks, recipients will receive a notice or letter from the IRS after they receive the payment. It should be kept for their tax records.
Are stimulus check considered taxable income?
No. As with the previous direct payments, the IRS does not consider the third round to be taxable income.
Why could some people get access to their money earlier than March 17?
The IRS announced that the settlement date for the initial wave of economic-impact payments by direct deposit would be March 17.
Some people have been upset that others have had access to the direct deposit before the March 17 date. But nothing nefarious is happening at those institutions that didn’t make the money available sooner.
How can I track my stimulus payment?
Federal benefit recipients — such as those receiving Social Security retirement benefits, survivor or disability benefits, Supplemental Security Income, Railroad Retirement benefits or veterans benefits — can also use the tool to check their payment status.
Since this past weekend, more than 35 million people have used the “Get My Payment tool” and received the status of their stimulus payments, the IRS said. The tool is updated regularly as additional information becomes available, the agency said.
Just be aware that some people have reported trouble accessing the tool. And no point in calling the IRS. If you get locked out — you get three attempts — you’ll have to wait 24 hours before trying again.
Why does the ‘Get My Payment’ tool say ‘Payment Status Not Available?’
The IRS says if you get this message, either the agency hasn’t processed your payment yet, it doesn’t have enough information to issue a payment or you’re not eligible to receive the third-round economic-impact payment.
Why does the ‘Get My Payment’ tool give me a message that says ‘Need More Information?’
It’s likely that the IRS tried to mail a payment and it was undeliverable. If you get this message, you may be able to use the “Get My Payment” tool to enter bank account information, which will allow the agency to send you a payment via direct deposit.
However, only people who get this message can use the tool to provide their bank account information, the IRS said on an information page about using the “Get My Payment” tool.
I was eligible for the full $1,400 based on my 2020 return, but I only received a partial direct deposit payment. What should I do?
The IRS may have used your 2019 tax return. It’s possible, based on that return, you weren’t entitled to the maximum $1,400 stimulus payment because you earned too much.
For the third round of payments, eligible individuals with an adjusted gross income of $75,000 or less are entitled to the full $1,400. The ceiling is $112,500 for individuals filing as head of household and $150,000 for couples filing jointly.
However, taxpayers will not receive a third payment if their adjusted gross income exceeds $80,000 if filing as single or married people filing separately, $120,000 if filing as head of household, or $160,000 if married and filing a joint return, or if filing as a qualifying widow or widower.
Fortunately, the IRS said it will be reviewing 2020 returns and, if a taxpayer is entitled to more money, the agency will adjust the return and automatically issue the remaining balance. So, additional payments will be made as the IRS continues processing tax returns.
The IRS has until the end of the year to issue the 2021 economic impact payments. If for some reason you’re eligible for the stimulus funds but still haven’t received the money, you can claim it on your 2021 return when you file next year.
What should I do if I didn’t get a direct deposit?
It’s possible the IRS will be mailing you a check or a prepaid debit card with your stimulus payment. So, check your mail carefully. Many people in both the first and second round of stimulus payments mistook the debit card for junk mail.
The debit card is issued by the Treasury Department’s financial agent, MetaBank.
How can I avoid paying fees on the debit card?
To avoid fees, move the money from the prepaid debit card to your bank account. MetaBank says instructions for the most recent debit card are coming, but based on previous rounds, you would have to use the Money Network Mobile App or go online to eipcard.com to transfer the stimulus payment.
You can also use the card at an ATM, but to avoid fees, you’ll have to find a machine that’s “in-network.” It’s similar to how you can avoid an ATM fee by using one operated by your own financial institution. If you use a foreign or “out-of-network” machine, you may be charged two fees, one by MetaBank and one by the operator of the ATM. Be sure to click the box to find a “surcharge-free” ATM.
Where to find more information?
More information about the direct payments and other related matters can be found at the following:
- Economic Impact Payments: IRS.gov/eip
- Stimulus check status: IRS.gov/getmypayment
- Other coronavirus-related tax relief: visit IRS.gov/coronavirus