Economic Impact Payment Round Three FAQ for Consumers

On March 11, 2021 the American Rescue Plan Act of 2021 became law. The act contains a provision to provide Americans with a third round of Economic Impact Payments, which were originated by the Internal Revenue Services on March 12, 2021 with an effective date of March 17, 2021 for those payments sent by ACH. To help answer common questions about these payments, the American Bankers Association has developed the following questions and answers. 

1. How large a payment will I receive?

The Internal Revenue Service is the agency responsible for determining eligibility. In general, eligible individuals will receive $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return. So, an eligible single person with no dependents will receive $1,400, while an eligible family of four – a married couple with two dependents – will receive $5,600. The payments will be based on the taxpayer’s latest processed tax return from either 2020 or 2019.

2. Am I eligible to receive a payment?

Most eligible people will receive their payment automatically. Payments will be reduced for people making $75,000 or above in Adjusted Gross Income or $150,000 for married people filing jointly. The reduced payments end at $80,000 for individuals and $160,000 for married people filing jointly. Anyone above these levels are ineligible for a payment. 
Unlike the prior economic impact payments, dependents are not restricted to only qualifying children under 17. Eligible families will receive payments for all their dependents claimed on a tax return. 

For complete eligibility information please visit the IRS website.

3. Will college students be eligible to receive a payment?

Dependents students can receive payments. However, these students will not receive the checks directly, instead the parent or guardian who claimed them will receive it. However, independent students who are not claimed on their parent or guardian’s taxes, are eligible to receive a stimulus payments as long as their income levels are below the annual income thresholds. 

For complete eligibility information please visit the IRS website.

4. When will I receive my payment?

If you have provided the Internal Revenue Service (IRS) with your bank information, you may receive your payment as early as March 17. All eligible recipients should receive payments by the end of March 2021. Those that have not registered their banking information with the IRS will have their payment, either a check or a prepaid card, mailed directly to them. Please note, however, that mailed payments will require more processing and mailing times. 

If you filed taxes for the tax years 2020 or2019 and included your bank routing and account number for payments or refunds, and this information has not changed, the IRS has the information it needs to send your payment electronically. In addition, for Social Security recipients, the IRS will use direct deposit to facilitate payments. If the direct deposit information you have provided in the past is for a bank-issued prepaid debit card, you will receive your funds on that card account.

You can check the status of your payment by visiting the IRS' "Get My Payment" web tool.

5. How will I receive my payment?

Tax payers with direct deposit information on file with the IRS will receive the stimulus payments that way. Those without current direct deposit information on file will receive the payment as a check or debit card in the mail.  Paper checks may be sent out weeks after the electronic checks are sent.

You can review your payment status at the IRS "Get My Payment" portal.

6. I don’t have a bank account. What can I do?

Many banks open accounts for most customers online without you ever needing to step into a bank branch. That is important because most bank branches are restricting access due to coronavirus concerns. Search online for banks that offer digital account opening, and reach out to banks to see if they are offering new, flexible ways to become a customer. While it is not possible to upload your routing information to receive an electronic payment for this round of EIPs, you will be able to cash or deposit your check at your new financial institution instead of using a high-cost check casher.

For more information, visit our resources on finding the bank that’s right for you. You can also learn about the Bank On movement to access low-cost, basic bank accounts.

7. What can I do if I don’t receive my payment?

Payments began going out in March 2021 and will continue throughout the month. If you have not received your full payment by the time you file your 2020 tax return, you may claim the Recovery Rebate Credit on your tax return. For people who only received a partial Economic Impact Payment, they can take the Recovery Rebate Credit for any remaining amount they’re eligible for by completing line 30 of the 2020 Form 1040 or 1040-SR.

For more information about Economic Impact Payments and the 2020 Recovery Rebate Credit, visit IRS.gov/eip.

8. What can I do to prevent fraudsters from accessing my funds?

There will be a large amount of funds disbursed to qualifying individuals. Accordingly, there is a risk for fraud of various types. The IRS has announced various ways individuals can be on guard against these types of bad activities. See the notice.

It is important to remember that banks or the federal government will never contact you by telephone, text or email asking for your account information. Do not provide any banking information to anyone claiming to be registering you for your relief payment.

9. What happens if a payment is made to someone who is deceased?

The legislation states that eligible recipients that were alive as of 1/1/20 are enabled to receive EIPs. If the recipients dies between 1/1/20 and receiving an EIP, that payment remains valid. These payments would be accepted through the deceased’s estate.

10. What happens if a payment is made to someone incarcerated or a non-resident alien?

Incarcerated recipients are eligible for EIPs. Non-resident aliens are not eligible.

11. Will the stimulus payments affect my taxes for this or next year?

None of the three stimulus checks are considered income. Consequently, they aren’t taxable and shouldn’t increase of reduce what you may owe when you file taxes.