President Trump signed the latest coronavirus relief bill into law on December 31. The $900 billion stimulus package earmarks funding for schools, COVID-19 vaccine research and distribution, small businesses, two critical federal unemployment programs, and another round of direct payments to Americans.
However, at only $600, the next series of checks are half the size of the $1,200 payments the IRS and Treasury Department issued last spring. Additionally, the legislation text mandates that the government has until January 15 to distribute the checks to more than 165 million qualifying taxpayers.
The deadline poses a significant logistic problem for the IRS, which is sending payments in the form of direct deposits, physical checks, and prepaid debit cards. Most people will — and have — receive their funds in time.
According to the IRS’s website, the “IRS and Treasury continue to work closely with our partners in the tax and financial industry to do everything possible to get the second round of Economic Impact Payments to the American people as quickly as possible.”
“At this point, over 100 million EIPs have been direct deposited into eligible recipients’ accounts. Some recipients may have had their payment directed to the temporary bank account established when their 2019 tax return was filed,” the agency continues. “The IRS and tax industry partners are taking immediate steps to redirect stimulus payments to the correct account for those affected. The IRS anticipates many additional taxpayers will receive payments following this effort.”
Still, millions of people anticipate the much-needed government relief who may not receive their money before the January 15 deadline. The IRS said that these individuals will still receive this assistance, but they will have to claim the missing funds on their taxes and wait for it to come with their 2020 refund.
To complicate matters further, the IRS incorrectly issued millions of stimulus checks to inactive or closed bank accounts created by tax preparation companies when they processed their clients’ 2019 taxes. These companies often make these temporary accounts to automatically withdraw service costs from their clients’ tax refunds, eliminating the need for upfront payments.
In a statement, the House Ways and Means Committee said, “Initially people in this situation who checked the Get My Payment tool either saw a deposit into a temporary or unfamiliar bank account or received a `Payment Status Not Available’ message. The IRS initially told people in this situation that they would have to wait and claim the payment on their tax returns this year, but now the IRS has developed a solution that will help most impacted Americans receive deposits into their accounts much quicker.”
The law prevents tax preparation companies from transferring the stimulus payments from these temporary or closed accounts to those actively used by their clients, but that law is shifting.
“So far, they have developed a solution that will permit financial institutions to accept the deposits into temporary accounts and pass them on to the taxpayers,” the Committee continued. “This solution offered by the IRS was not previously permitted in most cases and won’t solve the issue for some institutions. This process is currently underway, and some impacted Americans have likely already received deposits into their accounts.”
You can log into the Get My Payment tool to check where the IRS will send your direct deposit and check your bank account for updates. Unfortunately, you cannot change your bank account information if you find the IRS has the wrong information.
Because the IRS is in the process of correcting this issue, you may not receive accurate information, such as account numbers and deposit dates, under the Get My Payment portal. Like the first round of stimulus checks, the IRS will issue payments based on the information from your previous tax returns.
If you never updated your information or filed in 2019, you may not receive a check before the deadline. If the IRS and Treasury Department do not issue your check, you can claim the funds under the Recovery Rebate Credit.
As of last Friday, the federal government has distributed more than 113 million direct deposits and 34 million debit cards and checks. If you wonder how much money you qualify for, this payment calculator can give you an estimate.
- Gittins, Will. “Will My Second Stimulus Money Be Paid as Notes, Check, Bank Transfer or Debit Card?” AS.com, AS En, 10 Jan. 2021, en.as.com/en/2021/01/10/latest_news/1610242566_946716.html.
- Price Mueller, Karin. “Second Stimulus Check Update: IRS Fixing Glitch That Stopped Millions of Payments from Going Through.” Nj, 9 Jan. 2021, www.nj.com/coronavirus/2021/01/second-stimulus-check-update-irs-fixing-glitch-that-stopped-millions-of-payments-from-going-through.html.