Some of the most frequently asked questions by our clients lately revolve around the economic stimulus payments being provided by the federal government. Last year, Congress passed the The Coronavirus Aid, Relief, and Economic Security Act, better know as The CARES Act. Most recently, a second coronavirus relief aid package was passed known as The American Rescue Plan Act of 2021. Both of these COVID-19 relief packages provided stimulus payments for qualifying individuals throughout the United States in the form of direct cash payments.
The following information should help alleviate most general questions for you, but as always we encourage you to contact our offices if you have more specific, legal inquiries:
The CARES Act of 2020 - Stimulus Payments 1 and 2
Who qualifies?
Per the Internal Revenue Service, you were eligible for the first Economic Impact Payment if you are a U.S. citizen or U.S. resident alien, you were not claimed as a dependent of another taxpayer and have a Social Security number valid for employment. Payments of $1,200 ($2,400 for a joint return) were issued to individuals whose adjusted gross income (AGI) did not exceed:
$150,000 if married and filing a joint return
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing status Payments were reduced by 5% of the amount by which your AGI exceeds the applicable threshold above.
Additionally, those with qualifying children received up to an additional $500 per qualifying child. For the first and second stimulus payments excluded adult children over the age of 17.
The American Relief Act of 2021 - Stimulus Payment 3
Who Qualifies?
Per the Internal Revenue Service, generally, if you are a U.S. citizen or U.S. resident alien, you are eligible for the full amount of the third Economic Impact Payment if you (and your spouse if filing a joint return) are not a dependent of another taxpayer and have a valid Social Security number (see exception when married filing jointly) and your adjusted gross income (AGI) on their tax return does not exceed:
$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.
Payments of $1,400 ($2,800 for a joint return) were issued to individuals whose adjusted gross income (AGI) did not exceed limits stated above.
Payments will be phased out – or reduced -- above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds:
$160,000 if married and filing a joint return or if filing as a qualifying widow or widower
$120,000 if filing as head of household or
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.
For individuals or couples exceeding the listed AGI amounts, the payments would be reduced and then phased out. Additionally, the third round of economic relief payments include all dependents, regardless of age, as long as they are listed on the prior years tax returns a qualifying dependents. Each qualifying dependent, is eligible for an additional $1,400.
Who are the stimulus payments sent to?
Stimulus payments are sent to recipients who filed either a 2019 or a 2020 tax return. The electronic payments are deposited into the bank accounts listed on the previous years tax returns. If tax payers did not provide direct deposit information during the previous year, the economic stimulus payments are deposited on to prepaid debit cards (if applicable) or sent via check through the mail.
What if I was eligible for payments 1 and 2, but never received the stimulus payments?
Per the Internal Revenue Service, if you didn't get a first and/or second Economic Impact Payment or got less than the full amount, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if you don’t usually file a tax return.
Where can I track my 3rd economic stimulus payment?
If you haven't received your 3rd coronavirus economic stimulus payment yet, you can use the Get My Payment tool through the IRS website.
What if my ex-spouse received stimulus money I think I am entitled to?
According to the Internal Revenue Service, the economic stimulus payments were directed to individuals who most recently claimed qualifying dependents on their previous year's tax return.
For example, if your ex-spouse typically claims your shared child/children on odd number years, then they would have claimed the children as qualifying dependents on their 2019 tax returns, thus receiving the stimulus payments. If you claimed them on your 2019 return and still did not receive any stimulus payments, a call to the IRS may be worth the long hold times. If you are still unsure about whether you are entitled to stimulus payments, consult with a family law attorney about your concerns.
What if I have filed to divorce, but the divorce is not yet finalized, and my ex kept the stimulus money for themselves?
If the stimulus money was based off of a joint tax return filed in 2019, you may be entitled to half of the stimulus payments, as long as you reported income on that return. Consult with your divorce attorney to determine how much, if any, of the economic stimulus payment is due to you.
There are many questions swirling around about the economic stimulus payments. The information shared here is readily available on the IRS website. Should you have specific tax-related questions, we encourage you to seek the advice of a certified public accountant. If you have questions regarding your stimulus payments based on divorce or child custody orders and need legal advice on how to proceed, please contact Max Factor Law today.
Source: Stimulus Information - IRS.gov