Ok, as of today, March 18, 2021, we have THREE stimulus bills. They are causing a LOT of confusion.
Stimulus #1 was approved in March of 2020 and starting arriving by direct deposit into bank accounts as early as April 15, 2020. It was $1200 per adult, plus $500 for dependent children under the age of 17. Direct deposits continued through May, and checks were mailed as early as early May.
Stimulus #2 was approved in December 2020 and starting arriving by direct deposit into bank accounts as early as December 31st, 2020, but most direct deposits were in the first week of January 2020. This payment was $600 per adult and dependent children under the age of 17. Due to the upcoming tax season the IRS had to cut off payments in February and instruct people to claim their second stimulus payments on their 2020 tax returns if they had not been received.
Stimulus #3 was approved in March of 2021. Direct deposits have already started appearing in bank accounts. I have not heard of any checks being received yet. This stimulus was much larger than the previous two, $1400 per person, including all dependents.
Stimulus #1 and #2 were actually prepayments on refundable tax credits for your 2020 income tax. This is why I have to report them on your 2020 tax return.
Stimulus #3 is an advance tax credit on your 2021 tax return. I am looking forward to this same dance this time next year.
So what’s the confusion? Well, among other things, the letters that were supposed to accompany the 2nd stimulus payments were completely decoupled from the payments. I just got a call from a client upset because she had received a notice that her stimulus payment would be mailed soon, and that it was $2400. With two young children at home she was expecting $5,600 and was pretty upset. But closer inspection revealed the notice was actually about the 2nd stimulus payment, and the check that would be coming “soon” had been deposited into her bank account two full months ago.
Please keep anything you receive from the IRS. Please believe me when I tell you that I need to know how much your first two payments were. Although I can no longer access the information about when and how your first two payments were received I can make some pretty good guesses.
If you can’t remember or can’t find your information, please create an account with the IRS and look up the information. I can’t do this for you.
Ok. Back to work.