The Consolidated Appropriations Act, 2021 included COVID-19 tax relief legislation. The payments received through this program are called several different things including Economic Stimulus, Economic Impact Payment and the Recovery Rebate Credit. Please refer to this page of the IRS website for the most current information.  

• Who is eligible for the Economic Impact Payment(EIP)? U.S. citizens or resident aliens who:
  • Have a valid Social Security number
  • Cannot be claimed as a dependent of another taxpayer, and 
  • Had adjusted gross income under certain limits.

• Who will receive the Economic Impact Payment automatically without taking additional steps?
  • Individuals who received a “first round” Economic Impact Payment
  • Individuals who filed a federal income tax for 2018, 2019, 2020 or 2021
  • Individuals who receive Social Security retirement, disability (SSDI), or survivor benefits
  • Individuals who receive Railroad Retirement benefits
  • Individuals who receive Supplemental Security Income (SSI)
  • Veterans Affairs recipients

• What if none of the above apply to me?

You would claim the Recovery Rebate Credit  on your 2020 or 2021 income tax return and receive a payment for the full amount of the first, second and third round of Economic Impact Payments in the form of an income tax refund

• How much is the Economic Impact Payment?

The first round of the Economic Impact Payment was $1,200 ($2,400 for married taxpayers) and issued in April of 2020. Parents also receive $500 for each qualifying child.  In general, a child who lives in the U.S., is under 17 years of age, and has a social security number is a qualifying child.                    

The second round of the Economic Impact Payment is $600 ($1,200 for married taxpayers) and was issued in December of 2020. Parents also receive $600 for each qualifying child.

The third round of the Economic Impact Payment is $1,400 for individuals or $2,800 for married couples, plus $1,400 for each dependent. This payment was issued in March of 2021.

• Do I qualify for the Economic Impact Payment if  I have an Individual Taxpayer Identification Number (ITIN)?

No,  you must have a Social Security number to receive the payment. However, the State of California will provide the Golden State Stimulus payments to families and individuals who have an ITIN and otherwise qualify.  Follow this link for more information and to determine the amount of your payment.  Golden State Stimulus  FT

• I filed a joint return with my spouse.  Will we receive the Economic Impact Payment if I have a valid SSN and my spouse has an IRS Individual Taxpayer Identification Number (ITIN)?

Yes, married taxpayers filing joint returns where one spouse has a Social Security Number and one spouse does not are eligible for a payment of $600 in addition to $600 per child with a Social Security Number.

• My children have Social Security numbers but I have an ITIN, do I qualify for Economic Impact Payment?

No, people with ITINs do not qualify.  However, children with social security numbers would be eligible to receive the stimulus under the Third round Economic Impact Payment even if their parent(s) have an ITIN.

• Is the Economic Impact Payment taxable?

No.  It is not taxable. People who receive an Economic Impact Payment this year should keep Notice 1444, Your Economic Impact Payment, with their tax records. This notice provides information about the amount of their payment, how the payment was made, and how to report any payment that wasn’t received.

For security reasons, the IRS mails this notice to each recipient’s last known address within 15 days after the payment goes out. It’s especially important for people to keep this notice if they think their payment amount is wrong. When they file their 2020 tax return, they can refer to Notice 1444 and claim additional credits, if they are eligible for them.

Taxpayers should keep this notice filed with all their other important tax records. These include W-2s from employers,1099s from banks and other payers, other income documents, and virtual currency transaction records.

• Will the credit be applied to back taxes I owe? 

The 2021 Recovery Rebate Credit amount will not be applied to past due federal income tax debts. Generally, tax refunds are applied to tax you owe on your return or your outstanding federal income tax liability. If you claim a 2021 Recovery Rebate Credit, and your return reflects a tax refund – the refund amount associated with the 2021 Recovery Rebate Credit will not be applied to a federal income tax liability.

Will the credit offset debts I owe to other government agencies? 

Yes, the 2021 Recovery Rebate Credit can be reduced to pay debts owed to other Federal government agencies (separate from federal income tax debt) as well as to state agencies. Keep in mind that the credit is part of your tax refund and your tax refund may be subject to other calculation adjustments.

• I received a letter from the IRS about my stimulus payment, what does it mean?

When the IRS either reduces or eliminates a refund, they will send a letter informing you of the reason. This denial involves the Recovery Rebate Credit. It is used by taxpayers to claim the Economic Impact Payment they did not receive. When it is claimed, it becomes a refund if granted. Here is a sample letter received by a client denying this credit.

The denial letter looks scary and contains all the possible reasons for the denial. In most cases, it is because you have already received the payment based upon IRS records. That is why it is important to thoroughly check your records, particularly bank deposit statements, to make sure you did not receive it. You can also set up an account at www.irs.gov to see your tax returns and any notices sent by the IRS about the economic impact statement. It is possible you might end up owing money. If the credit was used to offset a tax payment, the denial can sometimes result in you owing a tax due or increase the tax payment if one was already due. Now if you really did not receive the EIP, follow the instructions for appealing the denial. If it was sent by check, it might have been lost or stolen. Check your return to make sure it went to the correct account you specified for direct deposit. If it went to the wrong account, you would have to contact the financial institution to get their assistance in getting the money back to your account. Please note the denial does not result in any interest or penalties. As noted above, it may increase a tax due if used to offset a tax payment.

• What if I do not usually file a return? How will I get my Economic Impact Payment?

If you receive veteran’s disability compensation, a pension, or survivor benefits from the Department of Veterans Affairs, or your income level does not require you to file a tax return, then you need to submit information to the IRS to receive an Economic Impact Payment. Click on this link to update your information with the IRS: http://GetCTC.org/tax-aid.  Even though the title at the top of the page says Child Tax Credit you use the same form for missing Economic Impact payments.

• What do I need to do to receive the payment?

No action is required if you have filed a 2018, 2019 , 2020 or 2021 tax return or if you currently receive social security benefits.  The federal government will use this information to identify eligible individuals who should receive an Economic Impact Payment. Click here to check your payment status. If you have not filed your tax returns you should do so now. 

• How will I receive the Economic Impact Payment?

The majority of payments will be delivered through direct deposit, check, or through a pre-paid MetaBank debit card issued by the Department of Treasury. If you’re a recipient of certain federal benefits, you’ll receive the latest EIP in the same way you receive your benefit payments. You can check to see what economic payments you received by setting up an account with the IRS. Go to Your Online Account at irs.gov for more information.

• I received my third payment by check, but it was lost, stolen, or destroyed. How do I get a new one?                                   

If you received your third payment by check and it was lost, stolen or destroyed, you should request a payment trace so the IRS can determine if your payment was cashed. See How do I request a payment trace to track my third Economic Impact Payment?

• What if I only receive Social Security retirement income?

If you receive Social Security retirement, disability (SSDI), survivor benefits, Supplemental Security Income (SSI), or Veterans Affairs benefits, the IRS will automatically send you an Economic Impact Payment. You do not need to fill out any forms.

• I receive Social Security Disability (SSDI) and it says that my Economic Impact Payment Income will be sent to me automatically but, will I receive an additional $500 for each of my dependents as well?

Clients who don’t have a filing requirement and haven’t filed a return recently but who receive federal benefits like Social Security retirement, SSI, SSDI, Railroad Retirement Benefits, or Veteran’s benefits also don’t need to do anything. Their Economic Impact Payment will be automatically paid using the method they usually receive their benefits.

You can view more information on the economic payments at the IRS Economic Payment Information Center

• I am in college. Can I receive an Economic Impact Payment?

Yes.  So long you file a 2018, 2019, 2020 or 2021 tax return and are not claimed as a dependent on another person’s tax return.