The latest round of payments are the biggest yet, and open to more kinds of dependents. But some hassles encountered in past rounds could show up again, and maybe new ones, too.
For the third time in less than a year, the federal government is sending stimulus payments to millions of Americans, no small logistical feat. But that doesn’t mean it will go smoothly for everyone.
Some 90 million payments — totaling about $242.2 billion — are landing in bank accounts via direct deposit on Wednesday, the Treasury Department said. An additional 150,000 payments should also arrive shortly, in the form of paper checks. And still more will go out in the coming weeks.
The payments — a maximum of $1,400 — are the largest issued to date, and eligibility has been expanded to dependent adults, including college students. As with previous rounds of pandemic stimulus, many banks are making the full amount of the payments available to customers, even if the money went into overdrawn accounts.
But there could still be bumps ahead for some recipients. The fast phase-outs of payments mean people might receive less than they would have under prior rounds, or no payment at all. The legislative process that Congress used to pass the bill has left payments vulnerable to private debt collectors. Your payment could arrive in a different form this time. And the eligibility rules mean you may (or may not) be allowed to keep a payment issued for a now-deceased spouse.
There’s even been confusion in recent days about the timing of the payments, after some financial institutions chose to make the money available before the government actually began delivering it on Wednesday.
After President Biden signed the stimulus bill last week, the Internal Revenue Service, which is pushing out the payments for the Treasury, began sending notices that the stimulus payments would arrive on March 17. But a handful of online institutions, including Current and Chime, credited their customers in advance of the payments’ arrival.
Some customers of traditional banks took notice — or at least hoped the money would arrive over the weekend — and complained on social media that their institutions hadn’t made the money available sooner.
But nine banking and credit union industry groups said in a statement this week that the I.R.S. had determined the details of the deposits and their handling. “It is up to the sender, in this case the I.R.S., to decide when it wants the money to be made available and the I.R.S. chose March 17,” they said.
Demand for information hardly slowed Wednesday: Wells Fargo said heavy traffic caused problems for its online banking service. “This does not affect stimulus payments with March 17 effective date, which were credited to accounts today,” the company said in a statement.
For this round, payments top out at $1,400 per person, including children and adult dependents. To qualify for the full amount, a single person must have an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income must be $112,500 or less, and for married couples filing jointly that number has to be $150,000 or below.
Partial payments are available to people who earn more, but they fall quickly to zero. For single filers, the checks stop at $80,000. For heads of household, the cutoff is $120,000. And for joint filers, it’s $160,000.
The payment amounts depend on the most recent information on file with the I.R.S., which could be from your 2019 tax return if you haven’t yet filed for 2020. (If you’re newly eligible for a payment based on your 2020 income but haven’t yet filed your return, the I.R.S. will be able to continue making payments until September. And if you still don’t end up with a payment by then, you can make a claim when you file your 2021 taxes.)
Frequently Asked Questions About the New Stimulus Package
The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.
Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more
This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.
There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.
The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.
You can find information on the status of your payment by using the I.R.S.’s Get My Payment tool. If the agency has your bank account information, the money should show up automatically if you’re eligible. If you receive veterans’ benefits or Social Security payments, whether for retirement or disability, the I.R.S. will generally send payments the same way you normally get that money. The agency said it planned to announce a payment date for these groups “shortly.”
People who don’t regularly file a tax return that includes any bank account information should keep an eye on the mail for a paper check or a debit card. But just because your previous two payments arrived one way doesn’t mean this one will arrive the same way, according to the I.R.S., which may send debit cards to ensure payments are available to recipients more quickly. (If you received a payment on a debit card before, the I.R.S. has already said that it would issue new cards for this payment instead of adding money to the old one.)
In prior stimulus rounds, some recipients have been confused to see their payments destined for unfamiliar accounts — often because they used tax-preparation services that created temporary accounts to receive their refunds. Both H&R Block and Intuit’s TurboTax have posted messages attempting to reassure customers who previously experienced glitches or delays.
Another problem some people encountered in prior rounds: Payments addressed to deceased relatives.
If your spouse or dependent died this year, even before Mr. Biden signed the bill, you can keep the payment that arrives for them, according to an I.R.S. spokesman. But if they died in 2020, they are not supposed to be eligible. For instructions on how to return any payment that nevertheless arrives for them, visit the I.R.S. website on the page with the phrase “Returning the Economic Impact Payment.”
The bill that authorized this round of payments shields them from government-ordered seizure — for example, if you’re in default on your federal student loans or late with child support payments, according to a Senate Finance Committee spokeswoman.
But private debt collectors can still make a run at the money, which wasn’t the case with the first two rounds of payments. Senator Ron Wyden, Democrat of Oregon and chairman of the chamber’s finance committee, said Senate rules had prevented the inclusion of such a provision in the bill. The committee spokeswoman said there could be a vote on stand-alone legislation to fix the problem this week.
Even so, some entities that might otherwise take a piece of your payment could give you a break, at least temporarily. Bank of America, Capital One, Citibank, JPMorgan Chase and Wells Fargo all said that their customers would have full and immediate access to the payments once they hit their accounts, even if their balances are below zero.
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