With the new COVID stimulus package, if eligible, you will be getting another stimulus payment from the government, also known as Economic Impact Payments. Distribution of payments have already started and should come the same way you got the first one. The new amount this time around will be $600 per adult and dependent child under 17 years old. There will be no payment for adult dependents, such as your college kid.
The first stimulus amount was based on 2018 or 2019 tax returns and was $1,200 per adult and $500 per child. The second stimulus amount is going to be based on your 2019 tax return but will be recalculated with your 2020 tax return. This is good news for those of you who have reduced income in 2020, because you will not lose out on receiving the stimulus. You will get a credit to your 2020 income tax instead of a stimulus payment.
The income limits for being eligible to get the stimulus are $150K for married filing joint or surviving spouse, $112,500 for head of household or $75K for all others. This stimulus amount phases out by 5% of every dollar over the limits. For those of you who like to do math like us, here is the formula per person: stimulus amount = $600 – (((AGI from 2019 – income limit listed above)/100)*5).
Congress is discussing a change to the bill which would change the amount to $2,000, up from $600, but that legislation has not passed and it is unclear if it will.
A link to the IRS for more information on these payments is here.
For more information, contact any member of our Leadership Team.
December 29, 2020