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Compliance Update with Amy K by Amy Kleinschmit, Chief Compliance Officer EIP3 The third round of Economic Impact Payment (EIP3) is here, which was part of the American Rescue Plan Act signed into law last week by President Biden. The IRS announced that the settlement date for the initial wave of tens of millions of economic impact payments by Direct Deposit will be Wednesday, March 17. The Nacha Rules require the banks and credit unions to make the funds available to the account holders by 9:00 a.m. local time on the settlement date. As the IRS explained in their Friday press release, no action is needed by most taxpayers. The payments will be automatic and, in many cases, similar to how people received the first and second round of Economic Impact Payments in 2020. People can check the “Get My Payment” tool on IRS.gov to see the payment status of the third stimulus payment. The EIP3 will be based on the taxpayer’s latest processed tax return from either 2020 or 2019. This includes anyone who successfully registered online at IRS.gov using the agency’s Non-Filers tool last year, or alternatively, submitted a special simplified tax return to the IRS. If the IRS has received and processed a taxpayer’s 2020 return, the agency will instead make the calculation based on that return. In addition, the IRS will automatically send EIP3 to people who didn’t file a return but receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) or Veterans Affairs benefits. This is similar to the first and second rounds of Economic Impact Payments, often referred to as EIP1 and EIP2. EIP3 eligibility. U.S. citizens or U.S. resident aliens are generally eligible for the full amount of the EIP3 if the individual (and spouse if filing a joint return) are not a dependent of another taxpayer and have a valid Social Security number (exception when married filing jointly) and the adjusted gross income (AGI) on their tax return does not exceed: $150,000 if married and filing a joint return or if filing as a qualifying widow or widower $112,500 if filing as head of household or $75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns. Payments will be phased out or reduced above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds: $160,000 if married and filing a joint return or if filing as a qualifying widow or widower $120,000 if filing as head of household or $80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns. As discussed in the IRS FAQs if the individual’s credit union/bank information is invalid or the account has been closed, the credit union/bank will return the payment to the IRS and the IRS will mail it to the taxpayer by check at the address the IRS has on file.
Compliance Update with Amy K
by Amy Kleinschmit, Chief Compliance Officer
EIP3
The third round of Economic Impact Payment (EIP3) is here, which was part of the American Rescue Plan Act signed into law last week by President Biden. The IRS announced that the settlement date for the initial wave of tens of millions of economic impact payments by Direct Deposit will be Wednesday, March 17. The Nacha Rules require the banks and credit unions to make the funds available to the account holders by 9:00 a.m. local time on the settlement date.
As the IRS explained in their Friday press release, no action is needed by most taxpayers. The payments will be automatic and, in many cases, similar to how people received the first and second round of Economic Impact Payments in 2020. People can check the “Get My Payment” tool on IRS.gov to see the payment status of the third stimulus payment.
The EIP3 will be based on the taxpayer’s latest processed tax return from either 2020 or 2019. This includes anyone who successfully registered online at IRS.gov using the agency’s Non-Filers tool last year, or alternatively, submitted a special simplified tax return to the IRS. If the IRS has received and processed a taxpayer’s 2020 return, the agency will instead make the calculation based on that return.
In addition, the IRS will automatically send EIP3 to people who didn’t file a return but receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) or Veterans Affairs benefits. This is similar to the first and second rounds of Economic Impact Payments, often referred to as EIP1 and EIP2.
EIP3 eligibility.
U.S. citizens or U.S. resident aliens are generally eligible for the full amount of the EIP3 if the individual (and spouse if filing a joint return) are not a dependent of another taxpayer and have a valid Social Security number (exception when married filing jointly) and the adjusted gross income (AGI) on their tax return does not exceed:
$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.
Payments will be phased out or reduced above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds:
$160,000 if married and filing a joint return or if filing as a qualifying widow or widower
$120,000 if filing as head of household or
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.
As discussed in the IRS FAQs if the individual’s credit union/bank information is invalid or the account has been closed, the credit union/bank will return the payment to the IRS and the IRS will mail it to the taxpayer by check at the address the IRS has on file.