No amount of discounts, sales, or promotions can change the fact that raising a kid is expensive — though they certainly make things easier. Of course, it also helps to have assistance from the government, especially during times like the coronavirus crisis.
Between diapers, baby food, clothing, extracurricular activities, saving for college, and hundreds of other things, parents could always use a financial boost. This is especially true for those experiencing an income disruption or who lost their job over the last year.
Unemployment makes everything harder, and when you have a child, the pressure is even greater. Fortunately, lawmakers finally approved a bill that includes a second round of stimulus checks and extensions for crucial government programs. If you’re a new parent whose child was born last year and meet the income limit criteria, you will receive an additional $600 for your child.
Last March, Congress passed the $2.2 trillion CARES Act, which distributed the highly popular $1,200 direct payments to American adults and $500 for qualifying child dependents. The recent $900 billion bill, approved in December, provides $600 checks for adults and eligible dependents.
The first and second stimulus checks are based on similar income thresholds:
- Single filers earning less than $75,000
- Heads of household earning less than $112,500
- Married couples filing jointly earning less than $150,000
For every $100 over these limits, the amount of the check decreases by $5. If somebody made $87,000 and received half of the $1,200 payment, they would not qualify for the second check. In the same vein, spouses filing jointly making $174,000 would have received $1,200 of the $2,400 ($1,200 for each person) but would not be eligible for assistance this time around.
For parents with dependents younger than 17, the formula slightly varies. Childrens’ stimulus benefits are tied in with their parents’, but it doesn’t start to taper off until the amount their parents qualify for reaches $0.
For example, a single parent who earns $87,000 annually would have seen a $1,100 check ($600 for them, $500 for their child) when the first round of payments were distributed. For the second stimulus payment, the child will still receive $600 even if the parent is ineligible.
Similarly, a married couple with a child making $174,000 would have qualified for $1,700 from the first checks ($1,200 for them, plus $500 for the child). This year, they won’t receive a stimulus check, but their baby will. The $5 decrease for every $100 over the income threshold will still apply.
Chances are that if parents who had a child last year never received a benefit for it. The baby may not have been born at the time. When the coronavirus first broke out across the US, and the economy nosedived, the federal government issued payments using the information it had on file. The IRS distributed checks depending on the latest tax year that individuals had filed, which would have been 2018 or 2019, since the deadline to file was delayed to July 2020. These forms would not have contained any information for babies born that year.
Initially, the IRS stated that taxpayers who submitted 2019 tax returns, filed information about their bank account, or managed to register for the first stimulus check through the IRS.gov website would receive a second check. However, tax season may have affected this result.
According to the IRS’ website, “The IRS is working hard to deliver the second Economic Impact Payment quickly, as required by law, while still preparing for the upcoming 2021 tax filing season. Due to the compressed timeline, the IRS is unable to reissue and mail checks and instead encourages people to file their 2020 tax return electronically to claim and receive the Recovery Rebate Credit quickly as possible.”
Even as people are receiving their second stimulus payments, a similar situation is occurring. 2020 tax year has barely concluded, which means almost nobody has had a chance to file their tax returns. Likely, the IRS will not have updated information for parents of children born in 2020, which means they may not receive the additional funds.
New parents whose children were born last year can still receive their child’s benefit. When you file your taxes for 2020, take note of the money you didn’t receive through the Refund Recovery Credit. Parents of children born in 2019 who never received a check last year can also claim this benefit. The IRS will include the missing stimulus money in your refund.
- CBS Boston. “Stimulus Check Update: How Much Money Will New Parents Receive?” CBS Boston, CBS Boston, 6 Jan. 2021, boston.cbslocal.com/2021/01/06/stimulus-check-update-baby-2020-dependent-payment/.
- Wilson, Diane. “’Payment Status Not Available’: IRS Says Some Won’t Receive Second Stimulus Check Automatically.” ABC11 Raleigh-Durham, WTVD-TV, 6 Jan. 2021, abc11.com/second-stimulus-check-my-update-irs/9392465/.