What you Need to Know about the Second Round of Economic Impact Payments
A new refundable recovery rebate credit for 2020 has been signed into law as part of the Consolidated Appropriations Act of 2021. These payments will be paid in advance to individuals by January 15, 2021 and are in addition to the direct stimulus payments received in 2020.
The new rebate is in the amount of $600 per eligible family member. So, a married couple with two qualifying children would receive at total of $2,400. A qualifying child is your child under the age of 19 or, if a student, under the age of 24. The credit is phased out at a rate of $5 per $100 starting at modified adjusted gross income over $150,000 for marrieds filing jointly and $75,000 for singles.
Didn’t receive your rebate? That’s OK.
You can claim your rebate on your 2020 tax return. The advance payment is based on information from your 2019 tax return. Eligibility is determined based on your 2020 income. So, if you did not receive the rebate based on 2019 income or received a payment of less than $600 because of the phase-out rules, you can still claim the credit on your 2020 tax return if your income in 2020 qualifies you to receive the credit.
Received a rebate that exceeds the amount of your eligible credit? Not to worry – you will not have to repay any of the amount.
President Biden has laid out his $1.9 trillion emergency relief plan which calls for an additional payment to individuals of $1,400. We will keep you informed as this plan works its way through the legislative process. If you have questions relating to the Economic Impact Payments, or any other tax issues related to COVID relief legislation, give the experts and Murtha & Murtha a call.