New stimulus dollars now are appearing in Americans’ bank accounts in what basically is a repeat of last spring’s Economic Impact Payments. They are intended to help taxpayers cope with the economic effects of the coronavirus epidemic.
The main difference this time is the size of payments. Individual taxpayers are receiving $600 each, which is half of the checks from the first round distributed by the federal government back in March.
The current payout is far less that the $2,000 being demanded by President Donald Trump, but Congress – specifically the U.S. Senate – is not ready to be that generous. Despite the wrangling over the amount, Trump did sign the law funding the $600 stimulus payments (“The Coronavirus Response and Relief Supplemental Appropriations Act of 2021,” if you’d like to know) on Dec. 27. So we’re all getting payments, with most expected to be paid electronically or to be in the mail by the end of January.
For individual taxpayers, the eligibility rules are pretty much the same as for the first payments sent in March:
Payments of $600 go to individuals with less than $75,000 in adjusted gross income (AGI). Then, the payment amount gradually declines until a full phase-out is reached at $87,000 income.
Married couples can expect $1,200 from this stimulus. Their phase-out begin at $150,000 and ends at $174,000 of AGI.
Families can count on $600 for each dependent younger than 17 years old this time around. That’s $100 more per child than in the initial round of payments.
Taxwise, you’re in the clear. Congress specifically said that the economic impact dollars are not taxable income.
owe any more taxes. So, in the end, the stimulus payment turns out to be tax free.
With the new tax season likely to open in less than a month, you can find answers to any questions about both the March and current Economic Impact Payments from Eric Buechler of EricJohn Ltd. He is an enrolled agent recognized by the Internal Revenue Service.