Policy Spotlight: What the Stimulus Means for Taxes, $10,200 Unemployment Tax Break, EITC
Stimulus Checks “Post” Today, Subject to Garnishment
Today is the “official” payment date of the $1400 Economic Impact Payment but many people have already received it. Wells Fargo and JP Morgan among others were withholding the funds until today, so clients of those institutions should see funds in their accounts today if they were included in the first wave of payments.
While the first two stimulus packages had provisions that did not allow private debt collectors to garnish from those two stimulus checks, the third stimulus check does not have that protection and private debt collectors may be able to seize those funds if they have a judgment against recipients. Banking groups are urging Congress to address this and Senate Finance Chairman Wyden said he intends to file a separate bill but there is nothing preventing private debt collectors from garnishing the third stimulus check. Check out the IRS Get My Payment portal to see when your stimulus check may come.
Taxes: Unemployment, Earned Income Tax Credit
Unemployment
The $1.9 trillion COVID relief bill waives federal tax on up to $10,200 of unemployment benefits for single adults who earned less than $150,000 a year in 2020. Married couples are eligible for up to $20,400.
- If you haven’t filed 2020 taxes, then see the IRS guidance here for how to claim the tax break.
- If you have filed your 2020 taxes, then an amended return MAY BE required, but that process has not been ironed out yet. The IRS says to wait for further guidance.
Earned Income Tax Credit
Thanks to the “lookback” provision in the stimulus signed in December, tax filers who earned less in 2020 than in 2019 can use either their 2019 or 2020 income when filing 2020 taxes, whichever yields the biggest refund. See our step-by-step guide to a bigger tax refund here.
