Investment

Why some couples get their stimulus money in two installments

Some couples will receive their stimulus money in two installments, the Internal Revenue Service said this week.

The reason: There is a problem in the system that splits payments for married couples when someone files an injured spouse claim.

At first, it seems to some of these couples that they only get half the stimulus payment, prompting thousands to express their frustration by posting in a Facebook group “Missing / Received Half Stimulus Status.”

A jointly filing couple can file a Form 8379, known as an Injured Spouse Claim, when the other owes federal tax arrears, has defaulted on a federal student loan, or owes child support. If the IRS grants the request, a portion of the couple’s repayment will not be offset to pay these debts.

Couples in this situation are eligible for the full stimulus payment, which is worth up to $ 1,400 per person – but they can get the money in two separate payments, the IRS said in a statement to CNN.

The second payment can come the same week or within weeks of the first payment. These couples can check the status of their payments using the IRS Get My Payment online tool – but should check each spouse separately to see the status of the two payments.

In most cases, the second payment will be made like the first – as indicated by the 2019 or 2020 tax return. If the last tax return processed includes direct deposit information, the money will be sent to the bank account. . If no bank account information is on file, money will be returned by paper check or debit card by mail. In a few cases, one payment may come from direct deposit and the other sent by mail, the IRS said.

Who is entitled to a check for $ 1,400?

The third round of payments is expected to reach around 85% of families, according to the White House. Around 90 million payments came out last week and more are on the way.

Direct deposits were made first and the agency expedited the shipment paper checks and debit cards this week. More than half of households eligible for the payment are expected to have the money now, less than two weeks after President Joe Biden signed an extensive $ 1.9 trillion Covid relief bill.

Families will receive an additional $ 1,400 per dependent, so that a couple with two children could receive up to $ 5,600. Unlike previous cycles, families will now receive additional money for adult dependents over 17.

The total amount goes to people earning less than $ 75,000 in adjusted gross income, heads of households (such as single parents) earning less than $ 112,500, and married couples earning less than $ 150,000. But then the payments gradually disappear as income increases.

Lawmakers reduced the scope of payments this time around so that everyone who received a previous check does not get one now. It excludes people who earn at least $ 80,000 a year in adjusted gross income, heads of households who earn at least $ 120,000, and married couples who earn at least $ 160,000 – regardless of the number of children they have. ‘they have.

What year are the income limits based on?

The new income thresholds will be based on the taxpayer’s most recent return. If they have already filed a 2020 return by the time the payment is sent and it has been processed, the IRS will base the eligibility on their adjusted gross income for 2020. Otherwise, it will be based on the 2019 return or information submitted through an online portal set up last year for people who typically do not file tax returns.

If your 2019 income was less than your 2020 salary, you will not have to repay anything. But if your income drops in 2020, filing your tax return now – before payments are made – could mean you get a bigger check.

Payments are protected from most, but not all debt

Congress protected the latest round of stimulus payments from the garnishment of unpaid federal debts, such as student loans, tax debts and child support.

But the bill did not protect money from private debt collectors. Recipients with an unpaid credit card or medical bills for which a business has obtained a judgment against the debtor could see the new infusion taken from their bank accounts, potentially preventing those who need it from getting the emergency money. .

Lawmakers protected the $ 600 payments that were approved as part of the private debt collectors’ December stimulus, but the latest Covid relief bill did not include this protection due to procedural rules used by Democrats to get the bill through the Senate, where no Republican has signed.

Ohio Senator Sherrod Brown introduced a bill last week that would solve the problem, but it has yet to come to a vote. In the meantime, millions of stimulus payments have already been deposited directly into bank accounts where they could be entered by private debt collectors.

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