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People who don’t have to file taxes may need to register for monthly advance child tax credit payments

The IRS Non-filer Sign-up Tool offers a free and easy way for eligible people who don’t normally have to file taxes to provide the IRS the basic information needed – name, address, and Social Security numbers – to figure and issue advance child tax credit payments. Often, these are individuals and families who receive little or no income, including those experiencing homelessness.

Here’s who should use this tool
This tool is for people who did not file a tax return for 2019 or 2020 and did not use the IRS Non-filer tool last year to register for Economic Impact Payments. It enables them to provide required information about themselves, their qualifying children age 17 and under, their other dependents, and their direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account.

Here’s who should not use this tool
Eligible families who already filed or plan to file 2019 or 2020 income tax returns should not use this tool. Once the IRS processes their 2019 or 2020 tax return, the information will be used to determine eligibility and issue advance payments. Families who want to claim other tax benefits, such as the earned income tax credit, should not use this tool. They should file a regular tax return. For them, the fastest and easiest way to file a return is the Free File system, available only on IRS.gov.

About the advance child tax credit
The expanded and newly-advanceable child tax credit was authorized by the American Rescue Plan Act, enacted in March. Normally, the IRS will calculate the payment based on a person’s 2020 tax return, including those who use the Non-filer Sign-up tool. If that return has not yet been filed or is still being processed, the IRS will determine the initial payment amounts using the 2019 return or the information entered using the Non-filer tool that was available in 2020.

The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.

The IRS will issue these payments by direct deposit if correct banking information has been provided to the IRS. Otherwise, people should watch their mail around July 15 for their mailed payment. The dates for the advance child tax credit payments are July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

See Advance Child Tax Credit Payments in 2021 on IRS.gov for details on eligibility and more helpful resources.

The IRS asks community groups, non-profits, associations, education organizations and anyone else with connections to people with children to share this critical information about the advance child tax credit as well as other important benefits.

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IRS Sex workers taxes

The first step of good tax planning is good recordkeeping

Year-round tax planning is for everyone. An important part of that is recordkeeping. Gathering tax documents throughout the year and having an organized recordkeeping system can make it easier when it comes to filing a tax return or understanding a letter from the IRS.
Good records help:
• Identify sources of income. Taxpayers may receive money or property from a variety of sources. The records can identify the sources of income and help separate business from nonbusiness income and taxable from nontaxable income.
• Keep track of expenses. Taxpayers can use records to identify expenses for which they can claim a deduction. This will help determine whether to itemize deductions at filing. It may also help them discover potentially overlooked deductions or credits.
• Prepare tax returns. Good records help taxpayers file their tax return quickly and accurately. Throughout the year, they should add tax records to their files as they receive them to make preparing a tax return easier.
• Support items reported on tax returns. Well-organized records make it easier to prepare a tax return and help provide answers if the return is selected for examination or if the taxpayer receives an IRS notice.

Download this spreadsheet to keep track of all of your expenses and income.   Expenses Spreadsheet

In general, the IRS suggests that taxpayers keep records for three years from the date they filed the tax return. Taxpayers should develop a system that keeps all their important information together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.
Records to keep include:
• Tax-related records. This includes wage and earning statements from all employers or payers, interest and dividend statements from banks, certain government payments like unemployment compensation, other income documents and records of virtual currency transactions. Taxpayers should also keep receipts, canceled checks, and other documents – electronic or paper – that support income, a deduction, or a credit reported on their tax return.
• IRS letters, notices and prior year tax returns. Taxpayers should keep copies of prior year tax returns and notices or letters they receive from the IRS. These include adjustment notices when an action is taken on the taxpayer’s account, Economic Impact Payment notices, and letters about advance payments of the 2021 child tax credit. Taxpayers who receive 2021 advance child tax credit payments will receive a letter early next year that provides the amount of payments they received in 2021. Taxpayers should refer to this letter when filing their 2021 tax return in 2022.
• Property records. Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
• Business income and expenses. For business taxpayers, there’s no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
• Health insurance. Taxpayers should keep records of their own and their family members’ health care insurance coverage. If they’re claiming the premium tax credit, they’ll need information about any advance credit payments received through the Health Insurance Marketplace and the premiums they paid.

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IRS Sex workers taxes

Gig Economy Tax

What is the Gig Economy?
The gig economy—also called sharing economy or access economy—is activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website.

Gig Economy Income is Taxable
You must report income earned from the gig economy on a tax return, even if the income is:

From part-time, temporary or side work
Not reported on an information return form—like a Form 1099-K, 1099-MISC, W-2 or other income statement
Paid in any form, including cash, property, goods, or virtual currency

What to Do
Gig Workers
Find forms, keep records, deduct expenses, file and pay taxes for your gig work.

Here is a spreadsheet we created for you to track income and expenses:

Expenses Spreadsheet

Digital Platforms and Businesses
Classify workers, report payments, pay and file taxes for a digital marketplace or business.

What is Gig Work?
Gig work is certain activity you do to earn income, often through an app or website (digital platform), like:

Drive a car for booked rides or deliveries
Rent out property or part of it
Run errands or complete tasks
Sell goods online:
IWC, AVN, Night flirt etc
Rent equipment
Provide creative or professional services
Provide other temporary, on-demand or freelance work
Note: This list does not include all types of gig work.

What are Digital Platforms?
Digital platforms are businesses that match workers’ services or goods with customers via apps or websites. This includes businesses that provide access to:

Ridesharing services
Delivery services
Crafts and handmade item marketplaces
On-demand labor and repair services
Property and space rentals
Note: This list does not include all types of digital platforms.

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IRS Sex workers taxes

IRS working to help those without a permanent address get benefits including stimulus payments and tax credits

While the third round of Economic Impact Payments continue to be made automatically to most people, the IRS can’t issue a payment to eligible Americans when information about them isn’t available in the tax agency’s systems.
Economic Impact Payments, also known as stimulus payments, are different from most other tax benefits.
People don’t need a permanent address, a bank account or even a job to get these payments. Individuals may qualify for this money if they have a Social Security number and are not being supported by someone else who can claim them as a dependent.
Eligible people who haven’t received these payments should file a 2020 tax return, even if they don’t usually file. This will give the IRS information needed to send them a payment. Those experiencing homelessness may list the address of a friend, relative or trusted service provider, such as a shelter, drop-in day center or transitional housing program, on their tax return.
Those who missed either of the first two payments can still get this money by filing a 2020 tax return and claiming the recovery rebate credit. Filing a 2020 tax return is the only way, eligible people can receive the money from the first or second payments now. Most people can use IRS Free File to provide very basic information. There’s even a special section on IRS.gov that can help: Claiming the 2020 recovery rebate credit if you aren’t required to file a tax return.
The credit will be included in the filer’s tax refund. The IRS will send any third EIP amount they are eligible for separately after their return has been processed. Using IRS Free File to file a tax return and choosing direct deposit is the quickest and safest way to get a refund.
The American Rescue Plan expands EITC and the child tax credit benefits for the 2021 tax year. Some people will be able to get advance payments of the child tax credit later this year. There is nothing those who qualify need to do at this point other than file a 2020 tax return.
Options for those without a bank account People who don’t have a bank account should visit the Federal Deposit Insurance Corporation website for details on opening an account online or use the FDIC’s BankFind tool to locate an FDIC-insured bank.
BankOn, American Bankers Association, Independent Community Bankers of America, National Credit Union Administration have lists of banks and credit unions that can open an account online. Veterans, can visit the Veterans Benefits Banking Program for financial services at participating banks.
Many reloadable prepaid cards or mobile payment apps also have account and routing numbers that individuals can provide to the IRS to get their payments.
Individuals experiencing homelessness can also receive the EITC For people experiencing homelessness who have a job, filing a tax return often carries a bonus — getting a refund based on various tax benefits, especially the earned income tax credit for low-and moderate-income workers and working families.
To get the credit, federal law requires that a worker live in the U.S. for more than half of the year and meet other requirements. This means living in a home in any of the 50 states or the District of Columbia. Therefore, individuals experiencing homelessness, including those who stay at one or more homeless shelters, can meet that requirement.
Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, no tax, or even get a tax refund. The amount varies depending on the worker’s income, marital status, and other factors.
To find out if they’re eligible, people can use the EITC Assistant on IRS.gov. It’s available in both English and Spanish.

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IRS Sex workers taxes

Release The Kraken, District Court Orders. All Crypto Investors Should Pay Attention.

The Internal Revenue Service is conducting an “ongoing, extensive investigation involving substantial IRS resources” into cryptocurrency holders. As part of that investigation, the IRS is serving “John Doe” summons on various cryptocurrency companies, seeking court orders to require cryptocurrency exchanges to turn over account holder’s names and other key identifying information. On May 5, 2021, the United States District Court for the Northern District of California ordered Kracken to turn over key account information for its users, including (1) Name, (2) Taxpayer ID Number; (3) Date of birth; (4) Physical address; (5) Telephone number; and (6) Email address. For cryptocurrency investors who have unreported crypto – whether in an account with Kraken or anywhere else – the IRS is looking for you.
The IRS first filed a petition for leave to serve a John Doe summons, which would have required Kraken to provide specific account holder information to the IRS, on March 30, 2021. Rather than granting the petition, the Court issued an Order to Show Cause, requiring the IRS to explain why the petition, which requested a vast array of information, should not be denied for the failure to meet the “narrowly tailored” requirement of the statute authorizing such summonses. (You can read more about that here). The IRS responded by both reducing the scope of information requested and by explaining that when it comes to cryptocurrency, a lot of information is needed to determine whether or not a taxpayer is skirting the rules.

The IRS explained to the court that more than just a taxpayer’s name, address, date of birth, and taxpayer identification number are needed to determine whether there is a tax compliance issue. The extensive information is needed because the IRS is aware of account holders whose information was handed over in the Coinbase case that used “aliases, false addresses, or post office boxes, fictitious entity names, or other means to disguise their true identities, and taxpayers who created false identities are more likely to evade their taxes.” (emphasis added). In fact, in response to the Coinbase John Doe summons, over 170 account holders used a pseudonym instead of their legal name to set up an account. Driving home its point that it needs more than just account holder names and taxpayer identification numbers, the IRS explained to the court that “more than 750 [Coinbase account holder] taxpayers remain unknown to the IRS. These still-unidentified taxpayers had cryptocurrency proceeds that exceeded $100,000,000 that the IRS cannot examine because the limited identity information it received precludes a positive identification.” Put differently, from the Coinbase John Doe Summons alone, the IRS is still seeking names of 750 account holders who realized over $100,000,000 in proceeds and the IRS cannot identify them without additional information.

It is no wonder, then, that the IRS launched Operation Hidden Treasure to identify and pursue crypto account holders who have not reported and paid taxes on their crypto gains. And in asking the court in Kraken to allow access to specific account holder information, including a history of changes to the user’s profiles, the IRS has demonstrated its ability to learn from past mistakes and nimbly make adjustments. After reviewing the IRS’s response to the Order to Show Cause, the Court granted the modified petition. IRS Commissioner Charles Rettig applauded the ruling, noting, “There is no excuse for taxpayers continuing to fail to report the income earned and taxes due from virtual currency transactions. This John Doe summons is part of our effort to uncover those who are trying to skirt reporting and avoid paying their fair share.”

Importantly, the Court leaves open the possibility that further challenges to the summons may be brought. “Any further disputes as to the scope of the summons would benefit from adversarial briefing.” But the IRS now has the leave of court required to serve the John Doe summons. The statute that authorizes the summons process provides “any person who is entitled to a notice of a summons … shall have the right to begin a proceeding to quash such summons” within twenty days of service. A motion to quash is typically filed by a taxpayer whose information is being sought by a summons. In this case, it isn’t clear whether Kraken will notify its account holders when it has been served and the twenty-day clock to file a motion – for Kraken and for its account holders – begins. Even more uncertain is whether a motion to quash would yield any measurable result in narrowing the account information to be turned over.

What’s Next For Crypto Tax Enforcement?

The Coinbase and Kraken John Doe summons are by no means the end of the line for IRS enforcement. On April 1, 2021, the United States District Court for the District of Massachusetts granted a similar petition for a John Doe Summons to issue providing account information from Circle Internet Financial, formerly Poloniex LLC. The IRS has used John Doe summons very effectively before, most famously leading to the disclosure of tens of thousands of previously unreported foreign financial accounts and collection billions of unpaid federal income taxes. The first Swiss bank to receive a John Doe summons was UBS, but they were by no means the last. Crypto investors who have not reported all income earned should take no comfort if they haven’t yet heard from the IRS, or if they are at another exchange that isn’t named in this article. Operation Hidden Treasure isn’t aimed at identifying Coinbase account holders or Kraken account holders. It is aimed at identifying all crypto investors who are United States taxpayers, determining whether tax obligations have been met, and pursuing those who have failed to meet those obligations.

In my prior article on Operation Hidden Treasure, I urged readers who have undisclosed crypto to call a lawyer instead of confessing their “sins” to an accountant. There’s a good reason for this, and don’t just take my word for it. Tax litigator Anson Asbury explains why its best – for your and for your accountant – to take the approach of calling counsel if you are worried about past mistakes. “If you’ve made incomplete disclosures for prior years, and your accountant doesn’t know about it, she is not the person you want to tell for a number of reasons. You do not want to put her in the position where she is tempted to mislead an inquiring revenue agent about your disclosures (because she does not want to admit that the previously filed return she prepared was not accurate). That only puts both of you in jeopardy if the inconsistency is uncovered.” In addition, notes Asbury, “You also do not want to share any information with her that you do not want disclosed.” Accountants can and often are called to testify about what their clients did and did not tell them, and may not keep communications confidential in IRS civil or criminal examinations. “Finally,” says Asbury, “you want to preserve your accountant as a witness. She may be your best defense for reasonable cause. She cannot be a witness for you if she knows incriminating details that would have to be disclosed under oath.” Honestly is always the best policy when it comes to the current year’s return, but past sins should only be “confessed” to a lawyer.


from
www.forbes.com/sites/irswatch/2021/05/13/release-the-kraken-district-court-orders–all-crypto-investors-should-pay-attention/?ss=taxes&sh=6219e3487356

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Filing season reminder: An extension to file is not an extension to pay taxes

For most individual taxpayers the tax filing and payment deadline was postponed to May 17. Those who need more time to file beyond the postponed date, can request an extension to file.

Taxpayers must request an extension to file by May 17, or they may face a failure to file penalty. This extension gives them until October 15 to file their tax return. An extension to file is not an extension to pay. Taxes must be paid by May 17 to avoid penalties and interest on the amount owed after that date.

How to request an extension to file
To get an extension to file, the IRS urges taxpayers to do one of the following:
• File Form 4868 through their tax professional, tax software or by using Free File on IRS.gov.
• Submit an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or digital wallet and select Form 4868 or extension as the payment type.

An automatic extension of time to file will process when taxpayers pay all or part of their taxes electronically by the Monday, May 17 due date.

Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victims, taxpayers living overseas, including members of the military, and eligible support personnel serving in combat zones.

More information:
IRS extends additional tax deadlines to May 17 What Is the Due Date of My Federal Tax Return or Am I Eligible to Request an Extension?
Tax Topic 653, IRS Notices and Bills, Penalties, and Interest Charges

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IRS Sex workers taxes

Here’s why some people got more than one notice about their Economic Impact Payments

Here’s why some people got more than one notice about their Economic Impact Payments

After each of the three Economic Impact Payments is issued, the IRS is required to mail a notice to each recipient’s last known address. The notice provides information about the amount of the payment, how it was made and how to report any payment that wasn’t received. Some people may receive multiple notices about each payment. Most people will simply file the notice with their tax records and won’t need to contact the IRS or take any further action.
Here are some details about each notice and what action some people may need to take.
• Notice 1444, Your Economic Impact Payment. The IRS mailed this notice within 15 days after the first payment was issued in 2020. Some people received another Notice 1444 if the IRS corrected or issued more than one payment in the first round. Taxpayers who received a Notice 1444 but did not receive their first payment should review the frequently asked questions for instructions on what to do if their first payment is lost, stolen, destroyed or has not been received. People should keep this letter with tax year 2020 records.

• Notice 1444-A, You May Need to Act to Claim Your Payment. The IRS mailed this letter last year to people who typically aren’t required to file federal income tax returns but may have been eligible for the first Economic Impact Payment. People who didn’t get a first and second Economic Impact Payment or got less than the full amounts, may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if they don’t usually file a tax return.
• Notice 1444-B, Your Second Economic Impact Payment. The law that authorized the second payment gave the IRS more time to mail Notice 1444-B after the second payments were issued. This means people likely received their second payment several weeks before Notice 1444-B arrived. Taxpayers who received Notice 1444-B but didn’t receive the second payment should read the FAQs about what to do if their second payment is lost, stolen, destroyed or has not been received. People should keep this letter with tax year 2020 records.
• Notice 1444-C, Your 2021 Economic Impact Payment. The IRS is mailing this letter to people who received a third Economic Impact Payment. People should keep this letter with tax year 2021 records.
People should keep any IRS notices they receive about Economic Impact Payments with other tax records. The IRS cannot issue replacement copies of these notices. Taxpayers who don’t have their notices can view the amounts of their Economic Impact Payments through their online account.

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IRS Sex workers taxes

IRS: Some people get more time to file without asking; Anyone else can request an automatic extension

WASHINGTON − Anyone can request an automatic tax-filing extension, but some people get extra time without asking, according to the Internal Revenue Service.
Due to the ongoing pandemic, this year the IRS postponed the usual April 15 deadline for filing individual income tax returns until May 17, 2021. Even so, as is the case every year, many Americans will still need more time to meet their tax-filing obligation.
The IRS estimates that more than 16 million taxpayers will get an automatic extension this filing season, either by filing a form or making an electronic tax payment. But some taxpayers, including disaster victims, those serving in a combat zone and Americans living abroad get more time, even if they don’t ask for it. Here are details on each of these special tax-relief provisions.
Disaster victims
Victims of the February winter storms in Texas, Oklahoma and Louisiana have until June 15, 2021, to file their 2020 returns and pay any tax due.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in a federally declared disaster area when at least one area qualifies for FEMA’s Individual Assistance program. Ordinarily, this means that taxpayers need not contact the IRS to get disaster tax relief.
This relief also includes more time for making 2020 contributions to IRAs and other plans and making 2021 estimated tax payments. In some cases, relief is also available to people living outside the disaster area if, for example, they have a business located in the disaster area, have tax records located in the disaster area or are assisting in disaster relief. For details on all available relief, visit the Around the Nation page on IRS.gov.
Combat zone taxpayers
Military service members and eligible support personnel serving in a combat zone have at least 180 days after they leave the combat zone to file their tax returns and pay any tax due. This includes those serving in Iraq, Afghanistan and other combat zones. A complete list of designated combat zone localities can be found in Publication 3, Armed Forces’ Tax Guide, available on IRS.gov.
Combat zone extensions also give affected taxpayers more time for a variety of other tax-related actions, including contributing to an IRA. Various circumstances affect the exact length of the extension available to taxpayers. Details, including examples illustrating how these extensions are calculated, are in the Extensions of Deadlines section in Publication 3.
Taxpayers outside the United States
U.S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico have until June 15, 2021 to file their 2020 tax returns and pay any tax due.
The special June 15 deadline also applies to members of the military on duty outside the U.S. and Puerto Rico who do not qualify for the longer combat zone extension. Affected taxpayers should attach a statement to their return explaining which of these situations apply.
Though taxpayers abroad get more time to pay, interest — currently at the rate of 3% per year, compounded daily — applies to any payment received after this year’s May 17 deadline. For more information about the special tax rules for U.S. taxpayers abroad, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, on IRS.gov.
Everyone else
Taxpayers who don’t qualify for any of these three special situations can still get more time to file by submitting a request for an automatic extension. This will extend their filing deadline until Oct. 15, 2021. But because this is only a tax-filing extension, their 2020 tax payments are still due by May 17.
An easy way to get the extra time is through Free File on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868. To get the extension, taxpayers must estimate their tax liability on this form.
Another option is to pay electronically and get a tax-filing extension. The IRS will automatically process an extension when a taxpayer selects Form 4868 and makes a full or partial federal tax payment by the May 17 due date using Direct Pay, the Electronic Federal Tax Payment System EFTPS or a debit or credit card. Under this option, there is no need to file a separate Form 4868. Please note, you must register for EFTPS before using. Electronic payment options are available at IRS.gov/Payments.

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IRS is issuing third round of Economic Impact Payments

The IRS started issuing the third round of Economic Impact Payments. No action is needed by most taxpayers. The IRS will issue payments automatically by direct deposit and through the mail as a check or debit card.
Many people will receive the third payment the same way they received the first and second Economic Impact Payments. Because these payments are automatic for most eligible people, there’s no need to contact financial institutions or the IRS. People can check the Get My Payment tool on IRS.gov for status of their third stimulus payment.
Highlights of the third Economic Impact Payments
In general, most people will get $1,400 for themselves and $1,400 for each qualifying dependent claimed on their tax return. As with the first two Economic Impact Payments, most people will receive their third payment without having to take any action.
The third Economic Impact Payment is based on the taxpayer’s latest processed tax return from either 2020 or 2019. This includes anyone who successfully registered at IRS.gov using the agency’s Non-Filers tool last year or submitted a simplified tax return. If the IRS received and processed a taxpayer’s 2020 return before issuing someone’s third Economic Impact Payment, the amount is based on the 2020 return.
Those who received the first or second payment but don’t receive a payment by direct deposit will generally receive a check or a prepaid debit card, referred to as an EIP Card. The IRS will not add the third payment to an existing EIP card that people received for the first or second round of stimulus payments.
Under the new law, the IRS can’t apply the third Economic Impact Payment to past-due federal debts or back taxes.
Who is eligible for the third Economic Impact Payment
Generally, U.S. citizens or U.S. resident aliens are eligible for the full amount of the third Economic Impact Payment if they and their spouse, if they’re filing jointly, are not a dependent of another taxpayer and have a valid Social Security number and their adjusted gross income 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.
• $75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.
The payments phase out — or reduce — 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.
• $80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.

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IRS Sex workers taxes

IRS begins delivering third round of Economic Impact Payments to Americans

WASHINGTON – The Internal Revenue Service announced today that the third round of Economic Impact Payments will begin reaching Americans over the next week.
Following approval of the American Rescue Plan Act, the first batch of payments will be sent by direct deposit, which some recipients will start receiving as early as this weekend, and with more receiving this coming week.
Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of these payments will be by direct deposit.
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 on Monday to see the payment status of the third stimulus payment.
“Even though the tax season is in full swing, IRS employees again worked around the clock to quickly deliver help to millions of Americans struggling to cope with this historic pandemic,” said IRS Commissioner Chuck Rettig. “The payments will be delivered automatically to taxpayers even as the IRS continues delivering regular tax refunds. We urge people to visit IRS.gov for the latest details on the stimulus payments, other new tax law provisions and tax season updates.”
Highlights of the third round of Economic Impact Payments; IRS will automatically calculate amounts
In general, most people will get $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return. As with the first two Economic Impact Payments in 2020, most Americans will receive their money without having to take any action. Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of March 17.
Because these payments are automatic for most eligible people, contacting either financial institutions or the IRS on payment timing will not speed up their arrival. Social Security and other federal beneficiaries will generally receive this third payment the same way as their regular benefits. A payment date for this group will be announced shortly.
The third round of Economic Impact Payments (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.
For those who received EIP1 or EIP2 but don’t receive a payment via direct deposit, they will generally receive a check or, in some instances, a prepaid debit card (referred to as an “EIP Card). A payment will not be added to an existing EIP card mailed for the first or second round of stimulus payments.
Under the new law, an EIP3 cannot be offset to pay various past-due federal debts or back taxes.
The IRS reminds taxpayers that the income levels in this new round of stimulus payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly.) The reduced payments end at $80,000 for individuals ($160,000); people above these levels are ineligible for a payment. More information is available on IRS.gov.
New payments differ from earlier Economic Impact Payments
The third round of stimulus payments, those authorized by the 2021 American Rescue Plan Act, differs from the earlier payments in several respects:
• The third stimulus payment will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four (married couple with two dependents) will get $5,600.
• Unlike the first two payments, the third stimulus payment is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.
Additional information is available on IRS.gov.