A second stimulus is coming for millions of Americans. Here's everything you need to know about the new Coronavirus relief package, second stimulus check and what it means for you, your income and your taxes.
- Stimulus Payments for Individuals and Joint Taxpayers
- Extended Unemployment
- Special Lookback for Earned Income Tax Credit and the Child Tax Credit
For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.
A second stimulus is coming for millions of Americans.
The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 – a $900B relief package to deliver the second round of economic stimulus for individuals, families, and businesses was signed into law December 27, 2020. The bill provides relief through multiple measures and expands many of the provisions already put into place under the CARES Act, including a second round of direct stimulus payments to individuals and families.
Here's what relief is included:
Stimulus Payments for Individuals and Joint Taxpayers
A second wave of direct stimulus payments for millions of Americans – up to $600 for eligible individuals, $1,200 for joint taxpayers, and an additional $600 for each dependent child under 17 – is on the way for millions. This means a family with two children could receive $2,400.
There is nothing you need to do to get a stimulus payment. The IRS has begun to issue stimulus payments using the most recent information they have on file, likely from your 2019 tax return, either by direct deposit or by check.
As part of the income tax filing, the IRS receives accurate banking information for all TurboTax filers who receive a tax refund, which the IRS is able to use to deposit stimulus payments. For up to date information on your stimulus payment, visit the IRS Get My Payment tool.
So, how do you know if you may be eligible to receive a second stimulus payment?
If you have an adjusted gross income (AGI) of up to $75,000 ($112,500 if filing head of household, $150,000 if married filing jointly), you could be eligible for the full amount of the recovery rebate.
*Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 8b of your 2019 Form 1040.
As your AGI increases over $75,000 ($112,500 filing head of household, $150,000 married filing jointly), the stimulus amount will go down. The stimulus check rebate will completely phase out at $87,000 for single filers, $124,500 for head of household filers, and $174,000 for those married filing jointly with no dependents.
The bill also expands stimulus payments to mixed-status households (households with different immigration and citizenship statuses), meaning more households may be eligible for this stimulus than were for the first round. This may be retroactive, so some individuals that were ineligible for the first stimulus, provided under the CARES Act, may then be eligible to receive that payment as well.
*Note, if you think you may have been eligible for the first stimulus, but didn’t receive it, don’t worry. TurboTax will help you claim your stimulus payment in the form of a recovery rebate credit when you file your 2020 tax return.
Those people receiving Social Security retirement, disability, Railroad Retirement, VA, or SSI income and are not typically required to file a tax return, will again receive a stimulus payment. As in the first round, the IRS would use the information from your Form SSA-1099, Form RRB-1099, or the Veterans Administration to generate your stimulus payment.
Why haven’t I received my stimulus payment yet?
Unfortunately, because of an IRS error, millions of payments were sent to the wrong accounts and some may not have received their stimulus payment.
We have been working tirelessly with the Treasury and IRS to get stimulus payments to our customers. We know how important these funds are for so many Americans and we regret that an IRS error caused a delay.
UPDATE – January 8th
We are happy to share that stimulus payments will begin to be deposited on January 8th for millions of our customers affected by the IRS error. We expect most of these payments to be available that day, but banks could take a few business days to process. Payment will be deposited into the same bank account that customers received their 2019 tax refund.
Customers receiving a stimulus payment will receive an email from TurboTax informing them of the deposit. We will have more emails going out in the coming days – so if you did not receive one on January 8th, it could still be coming.
We appreciate your patience as these payments are processed. This update may not immediately be reflected in the IRS Get My Payment tool.
For more information, visit “Where’s My Second Stimulus Check?” article.
Unemployment payments will increase by $300 per week and the benefits will be extended until March 14, 2021.
The bill also extends the Pandemic Unemployment Assistance (PUA), which expands unemployment to those who are not usually eligible for regular unemployment insurance benefits. This means that self-employed, freelancers, and side-giggers will continue to be eligible for unemployment benefits.
Certain workers who have at least $5,000 per year in self-employment income, but are disqualified from receiving Pandemic Unemployment Assistance because they also have an employer could also be eligible for an additional $100 per week in unemployment benefits.
For more information on what the new coronavirus relief package means for the unemployed, visit our blog post here.
Special Lookback for Earned Income Tax Credit and the Child Tax Credit
This is a very important provision which has the potential to help workers who experienced lower income in 2020, or received unemployment income in lieu of their regular wages, get bigger tax credits and larger refunds in the coming year.
The special lookback rule will allow lower income individuals to use their earned income from 2019 to determine their Earned Income Tax Credit and the refundable portion of the Child Tax Credit in 2020, since their lower 2020 income could reduce the amount they are eligible for.
The Earned Income Tax Credit is the country’s largest program for working people with low to moderate income. More than 25 million eligible tax filers received federal Earned Income Tax Credit last tax season and the average Earned Income Tax Credit was $2,476 per filer.
Expanded Paycheck Protection Program (PPP) for Small Businesses and Eligible Non-Profits
The Emergency Coronavirus Relief Act of 2020, provides a second round of payments under the Paycheck Protection Program.
Self-employed individuals, small businesses, small 501(c)(6) organizations, restaurants, live venues, and EIDL grants will again be eligible. Also, businesses experiencing severe revenue reductions will have the opportunity to apply for a second PPP loan.
Businesses with 300 or fewer employees that have experienced 25% revenue loss in any 2020 quarter and small 501(c)(6) organizations that have 150 employees or fewer would be eligible for a Paycheck Protection Program under the COVID-19 Emergency Relief Package.
The expanded Paycheck Protection Program, also broadens the type of business expenses that can be forgiven under the loan to include supplier costs, will allow business expenses paid utilizing PPP proceeds to be tax deductible, and would simplify the loan forgiveness process.
Contractor Paid Leave
Contractors who were temporarily unable to work due to facility closures and other restrictions could be able to receive reimbursement for paid leave from federal agencies.
Eviction Moratorium and Rental Assistance
The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 extends the moratorium on evictions under the CARES Act, designed to protect renters from eviction, until January 31, 2021.
Families struggling to pay rent or with past due rent could be able to get assistance with paying past due rent, future rent payments, as well as utility bills.
The bill includes the permanent passage and, in some cases, multi-year extension of many additional tax provisions – commonly referred to as tax extenders. Tax Extenders provide tax relief and support for families and individuals through various mortgage relief, education and medical expense relief. Check back here for more details.
TurboTax Has You Covered
Don’t worry about knowing these tax provisions. TurboTax is here for you and will continue to keep you updated on coronavirus relief as more details and guidance come out. Be sure to check back with the TurboTax Blog and our TurboTax Coronavirus Tax Center for the latest information.
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