Second stimulus check: how the second payment will differ from the first
The second stimulus check will be similar to the first payment, although there are some important differences between it and the CARES Act.
The second round of stimulus checks for Americans are worth $600 for individuals earning up to $75,000 and couples earning $150,000, half the value of the first round of checks issued under the CARES Act. Taxpayers will also receive an additional $600 for each child under the age of 17.
Most families that received a check during the first round as part of the CARES Act can expect to see another payment perhaps as soon as next week.
Lawmakers finally passed another economic stimulus bill after months of failed negotiations. However, while your second stimulus check will look a lot like the earlier stimulus payment you received under the CARES Act, there are several important differences. The amount, for one, won't be the same. Eligibility for a second stimulus check is different, too.
Base amount of $600
The first thing people will notice about their second stimulus check is that the base amount is half as much as the first-round payments. Under the CARES Act, each eligible person received up to $1,200. However, under the covid-related Tax Relief Act, the base amount only goes up to $600.
Many people are going to be disappointed by the lower amount and lawmakers are well aware of this. That's why some members of Congress are already talking about another round of stimulus checks after President-Elect Joe Biden is in office in 2021. So, it's possible that there will be a third round of stimulus checks before too long to make up the difference.
Benefits with children
If you have children, you'll make up some of the difference from the lower base amount. For a child in your family who qualifies for the child tax credit, kids 16 years old or younger, you'll get an extra in your second stimulus check. Under the CARES Act, there was only an additional $500 per qualifying child.
As with the first-round payments, the second stimulus checks will be phased-out for people with higher incomes. Payments will be gradually reduced to zero if you're single, married filing a separate tax return, or a qualifying widow(er) with a 2019 adjusted gross income (AGI) above $75,000.
If you're married, both you and your spouse had to have a Social Security number to get a first-round payment under the CARES Act. However, under the covid-related Tax Relief Act, you can still get a second stimulus check if you have a Social Security number but your spouse doesn't.
The IRS sent over 1 million first-round stimulus checks to deceased people. That shouldn't happen as often with the second round of payments. The covid-related Tax Relief Act specifically states that anyone who died before January 1, 2020, is not eligible to receive a second stimulus check. The IRS is now allowed access to the Social Security Administration's "death master file." This will cut down on the number of second-round stimulus checks sent to people who have died.
Are you eligible to receive a payment?
You need a Social Security number to qualify for a relief check. As stated above, individuals earning up to $75,000, and couples earning up to $150,000 will receive the full amount.
Adult dependents do not qualify for a check. However, this time, eligible members of mixed-status families in which some members have Social Security numbers and some do not, will be eligible for payments, according to Kathleen Romig, senior policy analyst at the Center on Budget and Policy Priorities.
Under the CARES Act, households that had a single member without a Social Security number disqualified the entire household from receiving a payment. Crucially, citizen family members will also be able to receive the first check retroactively if they meet the other eligibility requirements.
When will the second round of checks be sent out?
Treasury Secretary Steve Mnuchin said on Monday that checks could start being sent as soon as next week.
But arrival timelines will vary for different taxpayers. The IRS started sending out the first round of payments around two weeks after the CARES Act was enacted in spring. Unfortunately, it took several months for some people to receive their checks as the IRS collected taxpayer information. Some people have not yet received their first payment.
Treasury Secretary @stevenmnuchin1 joined us to discuss that $900B stimulus package saying, "This is a very, very fast way of getting money into the economy... people are going to see this money at the beginning of next week.” @CNBC @jimcramer @carlquintanilla @davidfaber pic.twitter.com/wotCtLdmup— Squawk on the Street (@SquawkStreet) December 21, 2020
This time around, the IRS already has most taxpayers’ information and the infrastructure to send out the payments, so turnaround might be quicker for many people.
What if I haven’t received the first payment yet?
The deadline for the first checks has passed, however if you are eligible and still haven’t been paid or you believe the amount you did receive is incorrect you can still claim a “recovery rebate credit” when you file your 2020 taxes next year. There is more information on this on the IRS site.
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