WASHINGTON—The federal government sent the first batch of $1,400 per-person direct deposits on Friday, a day after President Biden signed a law authorizing the third round of direct aid to households in the year since the coronavirus pandemic began.
Payments began reaching some bank accounts Friday, according to Current, a banking app that said it had started crediting thousands of customers’ accounts shortly after 11 a.m. Chime, another app, said Friday on Twitter it had put $600 million into accounts already.
In previous rounds, transactions at larger banks sometimes took a few days to show up as being credited to accounts. The official payment date is March 17, according to the government.
On a call with reporters, Treasury and IRS officials declined to say how many payments had gone out in this first batch. Additional groups of direct deposits will be sent over the next few weeks.
People will get paper checks or new debit cards in the mail if the government doesn’t have direct-deposit information on file. Those will start arriving before the end of March. The IRS will relaunch the “Get My Payment” feature on its website on Monday so people can check the status of their money.
This third round of payments, worth a total of $411 billion, is larger than either of the previous two rounds last year, and most people will get more money. Households will get up to $1,400 for each adult, child and adult dependent. Those adult dependents—including college students and elderly relatives—were excluded from the previous payments.
The payment starts shrinking for an individual once adjusted gross income exceeds $75,000 and goes to zero when it hits $80,000. For married couples, the payment starts shrinking when income exceeds $150,000 and goes to zero at $160,000. Those cutoffs occur regardless of how many dependents are in the household.
Payments will taper off more quickly than in the prior rounds. Some people who got full payments before may not get full payments this time.
About 85% of Americans will get the full $1,400 per-person payment, according to the White House.
The IRS is basing the payments on the most recent tax return it had processed for each household—2020 for some and 2019 for others. It is also using information from the special tool it set up last year for people who don’t file tax returns so they could register for the first two rounds of payments.
Under the law, people who got payments based on 2019 and later file a 2020 return don’t have to pay any money back if their eligibility shrinks. Those eligible for more money based on their 2020 income and household size would automatically get those additional payments after they file their 2020 returns.
Beyond that, those who qualify for more money based on their 2021 income can claim the rest of the payment on their 2021 tax return, filed earlier next year.
Recipients of Social Security and other federal benefits programs will receive their payments automatically without taking any action. Dates for those payments haven’t been announced.
In some cases, federal beneficiaries who have dependents may need to file a 2020 tax return to get that part of the payment, according to the IRS.
Officials said they had done extra work this time to avoid a problem that had happened in the prior rounds, when some payments went into the wrong accounts.
At the White House on Friday, Mr. Biden said successfully implementing the full $1.9 trillion law would help establish trust in the public sector.
“We have to continue to build confidence in the American people that their government can function for them and deliver,” he said at an event with House and Senate members to celebrate the law’s passage.
Other provisions of the coronavirus relief law include an expanded child tax credit and $300-a-week supplemental unemployment benefits.
(D., Mass.), chairman of the House Ways and Means Committee, called again Friday for extending the April 15 tax-filing deadline. IRS officials said before the law was signed that there was no need for a blanket extension. They haven’t addressed how the agency will handle a retroactive piece of the law that makes the first $10,200 of unemployment benefits not taxable for households making under $150,000.
“While I am impressed with this phenomenal turnaround, taxpayers will have questions for the IRS about their stimulus payments, on top of questions related to the filing season and other provisions in the American Rescue Plan,” Mr. Neal said. “As the pandemic continues to impact IRS operations, the end of the filing season must be delayed.”
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Source: WSJ – US News