As part of the massive Consolidated Appropriations Act, 2021, Congress has included another round of stimulus payments. Eligible individuals will receive $600 ($1,200 for joint filers) plus $600 for each dependent child.

Like the stimulus payment under the CARES Act, each payment is phased out by $5 for every $100 over a threshold amount. This threshold amount is based upon 2019 adjusted gross income. The phaseout begins at $75,000 for single filers, $112,500 for heads of households, and $150,000 for joint filers. Thus, the payments are completely phased out for single filers with 2019 adjusted gross income over $87,000, heads of household with $124,500, and joint filers with $174,000. The total credit is reduced by $5 for each $100 in AGI above the applicable threshold. Each $600 credit per child phases out completely, with each additional $12,000 in AGI over the applicable threshold.

In order to be eligible for a stimulus payment, the individual must not be:

  • a nonresident alien,
  • able to be claimed as a dependent on another taxpayer’s return,
  • an estate or trust, and
  • must have included a Social Security number for both the taxpayer, the taxpayer’s spouse, and eligible children (or an adoption taxpayer identification number, where appropriate).

The advance credit is based on the adjusted gross income reported, and the qualifying children claimed on the eligible individual’s 2019 return. The IRS will make the payment via electronic funds transfer to the bank account that the payee authorized, on or after January 1, 2019, to deliver a refund or tax compensation. However, suppose an individual has not filed a 2019 return by the time the payments are determined. In that case, the cost is based on information provided by the Social Security Administration, Railroad Retirement Board, or Secretary of Veterans Affairs for the calendar year 2019.

As soon as practicable after the IRS distributes any payment to an eligible taxpayer, the IRS will send a notice by mail to the taxpayer’s last known address. The information will indicate the payment method, the amount of the price, and a phone number to contact at the IRS to report any failure to receive such compensation.

If you have any questions on the stimulus payments, please call our office. We are here to help you.