More Economic Impact Payments set for disbursement in coming days; taxpayers should watch mail for paper checks, debit cards

More Economic Impact Payments set for disbursement in coming days; taxpayers should watch mail for paper checks, debit cards

WASHINGTON – The Internal Revenue Service announced today that the next batch of Economic Impact Payments will be issued to taxpayers this week, with many of these coming by paper check or prepaid debit card.

For taxpayers receiving direct deposit, this batch of payments began processing on Friday and will have an official pay date of Wednesday, March 24, with some people seeing these in their accounts earlier, potentially as provisional or pending deposits. A large number of this latest batch of payments will also be mailed, so taxpayers who do not receive a direct deposit by March 24 should watch the mail carefully in the coming weeks for a paper check or a prepaid debit card, known as an Economic Impact Payment Card, or EIP Card.

No action is needed by most people to obtain this round of Economic Impact Payments (EIPs). People can check the Get My Payment tool on IRS.gov on to see if the their payment has been scheduled.

“The IRS continues to send the third round of stimulus payments in record time,” said IRS Commissioner Chuck Rettig. “Since this new set of payments will include more mailed payments, we urge people to carefully watch their mail for a check or debit card in the coming weeks.”

Following enactment of the American Rescue Plan Act on March 11, the IRS moved quickly to start delivering the third round of Economic Impact Payments. The IRS initiated the first batch of the $1,400 stimulus payments, mostly by direct deposit, on March 12.

Today marks the second batch of payments, with additional payments anticipated on a weekly basis going forward. The vast majority of taxpayers receiving EIPs will receive it by direct deposit. In addition, the IRS and the Bureau of the Fiscal Service leveraged data in their systems to convert many payments to direct deposits that otherwise would have been sent as paper checks or debit cards. This accelerated the disbursement of these payments by weeks.

Watch the mail for paper checks, EIP Cards

Taxpayers should note that the form of payment for the third EIP may be different than earlier stimulus payments. More people are receiving direct deposits, while those receiving them in the mail may get either a paper check or an EIP Card – which may be different than how they received their previous stimulus payments. IRS and the Treasury Department urge eligible people who have not received a direct deposit to watch their mail carefully during this period.

Paper checks will arrive by mail in an envelope from the U.S. Department of the Treasury. For those taxpayers who received their tax refund by mail, this paper check will look similar, but will be labeled as an “Economic Impact Payment.”

The EIP Card will come in a white envelope prominently displaying the seal of the U.S. Department of the Treasury. The card has the Visa name on the front and the issuing bank, MetaBank, N.A. on the back. Information included with the card will explain that this is an Economic Impact Payment. Each mailing will include instructions on how to securely activate and use the card. It is important to note that none of the EIP cards issued for any of the three rounds is reloadable; recipients will receive a separate card and will not be able to reload funds onto an existing card. EIP Cards are safe, convenient, and secure. EIP Card recipients can make purchases online or in stores anywhere Visa Debit Cards are accepted. They can get cash from domestic in-network ATMs, transfer funds to a personal bank account, and obtain a replacement EIP Card if needed without incurring any fees. They can also check their card balance online, through a mobile app, or by phone without incurring fees. The EIP Card provides consumer protections against fraud, loss, and other errors. The EIP Card is sponsored by the Bureau of the Fiscal Service and is issued by Treasury’s financial agent, MetaBank, N.A. The IRS does not determine who receives a prepaid debit card.

More information about these cards is available at EIPcard.com.

IRS Announces End of Tax Season Extended Until May15th

IRS Announces End of Tax Season Extended Until May15th

Taxpayers will have more time to get their taxes in order this year.

The Internal Revenue Service has pushed back the deadline for the tax filing season about one month to May 15 from April 15.

This will give taxpayers additional time to file their 2020 tax returns and pay any amounts owed to the IRS. Because May 15 falls on a Saturday, the final deadline for filers may be the following Monday.

The move from the IRS and Treasury Department comes after calls to extend the tax season increased following the passage of the $1.9 trillion American Rescue Plan, which meant the agency was tasked with sending another round of stimulus payments while processing tax returns and refunds.

The IRS in January pushed back the start of tax season to Feb. 12. This gave the agency more time to prepare after December Covid relief bill, which included a second round of stimulus checks to Americans that the agency was charged with delivering.

At the time, the tax collector kept the typical April 15 filing deadline, even though it meant a shorter than usual filing season.

In February, the agency did extend the tax filing deadline to June 15 for individuals and businesses in Texas, which was declared a disaster area by the Federal Emergency Management Agency after winter storms left residents without power.

At the time of this extension, we are still unaware of which states will follow suit with the IRS and extend their individual filing dates as well. This means that although your federal tax returns aren’t due on April 15th, your state returns may still be.

Keep an eye out for more details from NFS. As we find out more, we will let you know.

 

UPDATED 03-19-2021: MASSACHUSETTS Department of Revenue Announced they will follow the IRS extending due date of individual tax filings and payments to May 17th, 2021.

IRS, Treasury disbursed 90 million Economic Impact Payments from the American Rescue Plan

IRS, Treasury disbursed 90 million Economic Impact Payments from the American Rescue Plan

WASHINGTON – Today, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they disbursed approximately 90 million Economic Impact Payments from the American Rescue Plan. As announced last week, Economic Impact Payments are rolling out in tranches to millions of Americans in the coming weeks.

The first batch of payments were mostly sent by direct deposit, which some recipients started receiving this past weekend. As of today, all recipients of this first batch of direct deposit payments will have access to their funds. Here is additional information on this first batch of payments:

  • These payments began processing on Friday, March 12. Some Americans saw the direct deposit payments as pending or as provisional payments in their accounts before today’s official payment date.
  • The first batch of payments primarily went to eligible taxpayers who provided direct deposit information on their 2019 or 2020 returns, including people who don’t typically file a return but who successfully used the Non-Filers tool on IRS.gov last year.
  • In total, this first batch included approximately 90 million payments, which are valued at more than $242 billion.
  • The use of direct deposit to issue these payments means that they are being delivered remarkably faster than would otherwise be possible.
  • While the majority of payments were delivered by direct deposit, which reach individual taxpayers more quickly than paper checks, Treasury mailed roughly 150,000 checks worth approximately $442 million.
  • Finally, since this past weekend, more than 35 million people have received their stimulus payment status through the “Get My Payment” tool on IRS.gov, which is updated on a regular basis as updated information is available.

Additional batches and 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 all Economic Impact Payments will be issued by direct deposit. No action is needed by most taxpayers; the payments are automatic and, in many cases, similar to how people received their first and second round of Economic Impact Payments in 2020.

Individuals can check the “Get My Payment” tool on IRS.gov to see the payment status of these payments. Additional information on these Economic Impact Payments, along with a Fact Sheet of Frequently Asked Questions, is available on IRS.gov.

The American Rescue Plan of 2021 has PASSED

The American Rescue Plan of 2021 has PASSED

The American Rescue Plan Act of 2021 has been passed by the U.S. Senate and House of Representatives, and the President of the United States has signed it into law. The latest stimulus package succeeds the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the Consolidated Appropriations Act of 2021, recently passed in December 2020. The Act extends some aspects of the previous bills while also creating new recovery plans.
At almost two trillion dollars, the plan is designed to facilitate the United States’ recovery from the economic fallout and health effects of the COVID-19 pandemic by mitigating the economic effects of the pandemic with strategies to fight the virus itself. It provides for direct financial payments to individuals (up to $1,400 per individual and dependent), extends unemployment benefits, continues housing assistance and provides funds for state and local governments to help schools re-open safely, and subsidizes COVID-19 testing and vaccination programs.
The new bill is nearly 600 pages long and includes many provisions. For your convenience, this email is to provide you with a high-level summary of the key highlights that have the greatest impact on both individuals and businesses.
  • Direct Financial Payments: The legislation provides for a third economic impact payment to qualifying Americans. Individuals with adjusted gross incomes (AGIs) up to $75,000 and couples with AGIs up to $150,000 per year will receive direct payments of $1,400 per person.  So will each of their dependents regardless of age. Payments to individuals with AGIs over $75,000 will be reduced until they phase out entirely at $80,000 ($160,000 for couples). Eligibility and benefit levels are based on 2019 or 2020 income tax filings. For households who have already filed their income tax return for 2020, the IRS will use that information to determine eligibility and size of payments. For households that haven’t yet filed for 2020, the IRS will review records from 2019 to determine eligibility and size of payment. That includes those who used the “non-filer portal” for previous rounds of payments.
  • Extended Unemployment Benefits: The American Rescue Plan extends the current $300 per week supplement from March 14, 2021 to September 6, 2021. In addition, the first $10,200 in 2020 benefits is tax-free for families making $150,000 or less in adjusted gross income, thereby waiving taxes on up to $20,400 of unemployment benefits for married couples. Taxpayers who had taxes withheld from unemployment benefits in 2020 will be able to recover them when they file their 2020 taxes or through an amended tax return if they have already filed. If you are a client of QRGA, please know that we are handling this on your behalf. If you have already filed your 2020 taxes and are affected by this change, we will be contacting you to discuss amending your tax returns to take full advantage of this tax law change. For clients who have not filed but are affected, we will not finalize your tax return until we can incorporate the unemployment income exclusion of $10,200 for individuals or $20,400 for couples. If you have already filed your return this year and had unemployment benefits taxed, we will be in touch soon to file an amended return. The Act also provides a 100% subsidy of COBRA health insurance premiums so unemployed workers can remain on their employer healthcare plans through the end of September.
  • Continued Housing Assistance: The national eviction moratorium which ends March 31, 2021 will not change under the plan but additional funding will provide relief to those behind on mortgages, rent and utility bills. The legislation includes $25 billion in emergency rental assistance and $10 billion for mortgage assistance.
  • Expanded Child Tax Credit: The act provides monthly direct deposit payments totaling $3,000 a year for each child ages 6 to 17, and $3,600 for each child under age 6 for couples who make $150,000 or less and single parents who make $112,500 or less. For example, a family with one child under the age of 6 would receive $300 per month and $250 per month for children ages 6 to 17. As written, the bill provides for one year of credit payments.
  • Tax-Free Student Loans: While the plan does not include student loan forgiveness, it does include a provision that any student loan forgiveness passed between December 30, 2020 and January 1, 2026 will be tax free. Under the current law, student loan forgiveness would be treated as taxable income.
  • School Grants: The American Rescue Plan sets aside $130 billion for K-12 education. The money is allocated to assist schools in reopening safely by implementing measures such as reduced class sizes, improved ventilation, and the purchase of personal protective equipment.
  • Pandemic Response: Approximately $50 billion will pay for continuing COVID-19 testing and contact tracing, $19 billion will help increase the size of the public health workforce and $16 billion will fund vaccination programs (vaccine distribution and supply chains).
  • State and Local Government: The American Rescue Plan includes $350 billion in aid to state and local governments to help replace lost tax revenue due to the pandemic.
  • Business Assistance: The Paycheck Protection Program (PPP) will receive an additional $7.25 billion and more non-profit organizations are now allowed to apply for forgivable loans to help cover payroll and other operating expenses. Additionally, the Small Business Administration gets $28 billion for a new, pandemic assistance grant program for restaurants and bars and another $15 billion for Emergency Injury Disaster Loans (EIDLs).
  • No Change to Minimum Wage: Over the past several weeks there has been much debate over the gradual minimum wage increase to $15 per hour by the year 2025 that was included in the initial draft of the legislation. This measure has been removed from the final bill and the current federal minimum wage remains at $7.25 per hour.
In summary, the American Rescue Plan stimulus package provides welcome assistance to facilitate the country’s recovery from the devastating economic and health effects of the COVID-19 pandemic. While the bill has been passed by Congress and signed into law by the President, there may be additional informational information and analysis on the legislation. As always, we will keep you updated along the way. In the meantime, your NFS team is here to answer any additional questions you may have.