IRS BEGINS SENDING THIRD ROUND OF ECONOMIC IMPACT PAYMENTS
In a News Release and Fact Sheet, the IRS has announced that it has begun sending out the third round of Economic Impact Payments (EIP 3), authorized under American Rescue Plan Act (APRA, PL 117-2). The payments will begin reaching recipients over the next week.
The first batch of payments were sent by direct deposit this past weekend.
Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of these payments will be by direct deposit.
No action is needed by most taxpayers. The payments will be made automatically and, in many cases, people will receive them in the same way they received the first and second round of EIPs in 2020 (EIP 1 and EIP 2; for details of EIP 2, see Information on issues involving receiving second economic impact payments, Federal Tax Update (01/28/2021)). People can check the Get My Payment tool to see the payment status of their EIP3.
IRS will automatically calculate amount of EIP 3. In general, most people will get $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return.
The Fact Sheet says that the IRS will use available information to determine eligibility for, and amount of, EIP 3. The IRS will look first to the individual or couple’s:
- 2020 tax return.
- 2019 tax return if the 2020 return has not been submitted or processed yet.
- The information entered into the IRS’s Non-Filers portal if the individual or couple did not file a 2020 or 2019 tax return.
- Information possessed by other government entities for federal benefit recipients as of December 31, 2020, who do not usually file a tax return and received
Social Security or Railroad Retirement Board benefits, Supplemental Security Income (SSI) or Veteran Affairs benefits. The IRS is working with these agencies to get updated information for 2021 to assist with stimulus payments that will be issued at a date to be determined.
Some people won’t be eligible for EIP 3 even if they received an EIP 1 or EIP 2. EIP 3 will begin to be reduced for individuals with adjusted gross income (AGI) of $75,000 or above ($150,000 for married filing jointly.) The reduced payments end at AGI of $80,000 for individuals ($160,000 for married filing jointly); people with AGI above these levels are ineligible for a payment. EIP 3s for heads of household have different AGI limits.
ARPA provides that an EIP 3 cannot be offset to pay various past-due federal debts or back taxes.
EIP 3 differs from EIP 1 and EIP 2. EIP 3 differs from EIP 1 and EIP 2 in several respects:
- EIP 3 will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four (married couple with two dependents) will get $5,600.
- Unlike the first two payments, EIP 3 is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.