The second Economic Impact Payment – EIP2 has been rolled out by the Internal Revenue Service and the Treasury. Taxpayers who had their payment information with the IRS received their payments through direct deposit to their bank accounts or received a paper check. While the first Economic Impact Payment was $1,200, this one is half of it at $600. If you’re wondering why is my second EIP is lower, here is the explanation.
The Economic Impact Payments are an advanced payment of the recovery rebate credit. This tax credit was first introduced in early 2020 to help Americans ease the financial struggles of the COVID-19 crisis. If you haven’t received either one of the payments, take the recovery rebate credit on your federal income tax return to get your stimulus.
Recovery Rebate Credit 2021
The recovery rebate credit has a full value of $1,800, plus $500 for each dependent under the age of 17. If you have an adult dependent such as a college student, know that the $500 extra doesn’t apply to them. Generally, for a dependent to qualify for the $500 extra stimulus, he or she needs to qualify for the child tax credit. In other words, the child must be a qualifying child.
Income thresholds for the recovery rebate credit
The recovery rebate credit’s income thresholds are $75,000 for single filers and $150,000 for joint filers. The more you earn above the income threshold, the smaller the EIP gets. If your adjusted gross income is more than $99,000 or $198,000 on your 2019 tax return, you get no EIP. That said, depending on your AGI, the EIP might completely phase-out. It’s good to keep in mind that the extra $500 you get for dependents also gets reduced if your adjusted gross income is between $75,000 and $99,000 as a single filer or $150,000 and $198,000 as a joint filer.
To track the status of your payment, verify your identity through IRS Get My Payment and learn the status of your EIP2. Once again – as mentioned above, you will need to take the recovery rebate credit on your return if you haven’t received either one of the economic impact payments.