Second stimulus check: do I have to pay tax on Economic Impact Payment?
Early last week, the IRS began sending out the second round of coronavirus Economic Impact Payments to qualifying Americans.
The second round of stimulus checks began to be sent out to direct-deposit recipients last Tuesday, according to a press release issued by the Internal Revenue Service (IRS), which added that paper checks were to start being mailed out the following day.
How much is the second stimulus check?
As part of the $900bn Coronavirus Response and Relief Supplemental Appropriations Act, which was finally signed by President Donald Trump on 27 December, qualifying Americans get a stimulus check of up to $600, plus an extra credit of $600 per child dependent aged 16 or under.
Those who earned under $75,000 in the 2019 tax year will get the full check, officially known as an Economic Impact Payment, while a steadily smaller figure will be given to people on a higher annual income, up to a maximum phase-out limit of $87,000.
Is the second stimulus check taxable?
No. Like the first stimulus check, which was distributed as part of the CARES Act, a $2.2tn coronavirus relief bill passed in March, the second check will not be taxed.
Here’s how the IRS explained it in the Economic Impact Payment Information Center it created when it started sending out the first round of checks: "The Payment is not includible in your gross income. Therefore, you will not include the Payment in your taxable income on your Federal income tax return or pay income tax on your Payment.
"It will not reduce your refund or increase the amount you owe when you file your 2020 Federal income tax return."
The IRS adds: "A Payment also will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs."
Attempts to up check to $2,000 blocked by GOP-held Senate
Following President Trump’s call for what he said was a "ridiculously low" maximum stimulus check of $600 to be increased, the Democrat-controlled House of Representatives passed a bill raising this amount to $2,000 last Monday.
However, all last week Mitch McConnell, the leader of the Republican-held Senate, blocked attempts to hold a vote on the legislation in the upper chamber.
Criticizing what he termed as a "rush to borrow another half-a-trillion dollars for universal cash giveaways, regardless of need", McConnell said on New Year’s Day: "A huge chunk would essentially be socialism for rich people - money flowing to households earning well into six figures who did not lose any jobs or income last year. The House Democrats’ bill is just simply not the right approach."
In the unlikely event that Congress were to finally approve an increase to the second stimulus check figure, though, the IRS says it would move quickly to ensure those who have already received the smaller check still got the full amount.
"If additional legislation is enacted to provide for an additional amount, the Economic Impact Payments that have been issued will be topped up as quickly as possible,” the IRS says.
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