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Recent Tax Updates

Second Economic Stimulus Payment (Economic Impact Payment)

A second round of economic impact payments were included in the just passed Appropriations bill.

These payments are based on the taxpayers 2019 federal returns filing status, eligible dependent children claimed and AGI.

Individuals must have a valid work SSN and not be claimed as a dependent on another’s return (with the exception of dependent children under 17). This means that dependents that are 17, 18 and/or students age 19 – 24 are not eligible.

For these second stimulus payments for taxpayers that file a joint return with one spouse that does not have a SSN, the spouse with an SSN will receive a $600 economic impact payment.

As with the first payment these payments are considered an advance payment of the 2020 Recovery Rebate Credit. For those taxpayers who do not receive a second payment they may claim it when filing their 2020 federal return.

Here are some details of the 2nd Economic Impact Payment:

How payments will be distributed
The payments will be direct deposited to taxpayers who have this information on file with the IRS. The first payments will begin to show up in taxpayers accounts as early as December 29 and will continue through next week. Paper checks will begin to be mailed on December 30.

As with the first stimulus payments individuals who were not required to file a federal tax return but received Social Security benefits, railroad retirement benefits, Supplemental Security Income or veteran benefits will also receive a payment automatically.

If the IRS does not have direct deposit information on file for an individual, the IRS will send them a check by mail to the address on the taxpayer’s 2019 federal tax return.

Payment Amount:

  • $600 ($1,200 for MFJ)
  • $600 for each dependent child under 17

Begins to Phase Out:

  • Single – $75,000
  • Married Filing Joint – $150,000
  • Head of Household – $112,500

Individuals NOT eligible for a 2nd Stimulus Payment
Just as with the first payment earlier this year the following individuals are not eligible to receive a payment:

  • Taxpayers without a valid Social Security Number
  • Individuals who are 17, 18, 19-24 and a student that are claimed as dependent on another’s return
  • Any individual who is claimed as a dependent on another’s return

For more information on how the payments will be distributed and details on the payments see IRS News Release 2020-280 (Treasury and IRS begin delivering second round of Economic Impact Payments to millions of Americans).

Mark Castro, CPA

Mark Castro, CPA

Mark has been with CrossLink Professional Tax Solutions (CPTS) since 2008, but has been in the tax industry since 1990. As the government/tax industry liaison for CPTS, Mark has been very active in working with the IRS, States, and other tax industry members to help improve communications, promote standardization, and simplification of eFile systems. Mark has also been active with industry associations as a board member of the National Association of Computerized Processors (NACTP) and the Council of Electronic Revenue Communication Advancement (CERCA) for many years. These two associations work with the IRS and States to help solve key eFile and electronic tax system issues and work to improve the operations of the State and IRS eFile systems.

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