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Why some couples are getting their stimulus money in two payments

Some couples will receive their stimulus money in two payments, the Internal Revenue Service said this week.

The reason: there is a glitch in the system that divides the payments for married couples where one person has filed an injured spousal claim.

At first, it appears to some of these couples that they are receiving only half the stimulus payment — prompting thousands to express their frustration by posting in a Facebook group “Half Stimulus Missing/Received Status.”

A couple filing jointly can file a Form 8379, known as an injured spouse claim, when the other owes federal back taxes, has defaulted on a federal student loan or owes child support. If the IRS grants the claim, a portion of the couple’s refund won’t be offset to pay those debts.

Couples in this situation are eligible for the full stimulus payment, which is worth up to $1,400 per person — but they may get the money in two separate payments, the IRS said in a statement sent to CNN.

The second payment may come the same week or within weeks of the first payment. These couples can check the status of their payments using the IRS’s online Get My Payment tool — but should check each spouse separately to see the status of both payments.

In most cases, the second payment will be delivered like the first — as directed by the 2019 or 2020 tax return. If the most recently processed tax return includes direct deposit information, the money will be sent to the bank account. If no bank account information is on file, the money will be delivered by either a paper check or debit card in the mail. In a few instances, one payment may come as a direct deposit and the other mailed, the IRS said.

Who’s eligible for a $1,400 check?

The third round of payments is expected to reach about 85% of families, according to the White House. About 90 million payments went out last week and more are on their way.

Direct deposits went out first and the agency ramped up sending paper checks and debit cards this week. More than half of the households eligible for the payment should have the money by now, less than two weeks after President Joe Biden signed a sweeping $1.9 trillion Covid relief bill into law.

Families will receive an additional $1,400 per dependent, so a couple with two children could receive up to $5,600. Unlike prior rounds, families will now receive the additional money for adult dependents over the age of 17.

The full amount goes to individuals earning less than $75,000 of adjusted gross income, heads of households (like single parents) earning less than $112,500 and married couples earning less than $150,000. But then the payments gradually phase out as income goes up.

Lawmakers narrowed the scope of the payments this time so that not everyone who received a previous check will be sent one now. It cuts off individuals who earn at least $80,000 a year of adjusted gross income, heads of households who earn at least $120,000 and married couples who earn at least $160,000 — regardless of how many children they have.

On what year are the income limits based?

The new income thresholds will be based on a taxpayer’s most recent return. If they’ve already filed a 2020 return by the time the payment is sent and it has been processed, the IRS will base eligibility on their 2020 adjusted gross income. If not, it will be based on the 2019 return or the information submitted through an online portal set up last year for people who don’t usually file tax returns.

If your 2019 income was less than your pay in 2020, you will not owe back any money. But if your income fell in 2020, filing your tax return now — before the payments go out — may mean you’ll get a bigger check.

Payments are shielded from most debts — but not all

Congress shielded the latest round of stimulus payments from garnishment for outstanding federal debts, like student loan, tax debt and owed child support.

But the bill did not protect the money from private debt collectors. Recipients with unpaid credit card or medical bills for which a company has obtained a judgment against the debtor could see the fresh infusion taken from their bank accounts, potentially preventing those in need from getting the emergency cash.

Lawmakers shielded the $600 payments that were approved as part of the December stimulus from private debt collectors, but the latest Covid relief bill did not include that protection because of the procedural rules Democrats used to push the bill through the Senate, where no Republicans signed on.

Democrat Sen. Sherrod Brown of Ohio introduced a bill last week that would fix the problem, but it has yet to be taken up for a vote. In the meantime, millions of stimulus payments have already been directly deposited into bank accounts where they could be seized by private debt collectors.

Article Topic Follows: National Politics

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