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

by NFS | Mar 17, 2021 | Archives, Blog Posts, COVID

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

by NFS | Mar 11, 2021 | Archives, Blog Posts, COVID

• 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.