On December 27, 2020, the Consolidated Appropriations Act (CAA) of 2021 became law. This law provides for a second round of stimulus payments of up to $600 per qualified individual, to be issued by January 15, 2021 to most people. Incarcerated people are eligible for these payments.
If you have already received your first stimulus payment from the CARES Act, the IRS’s website confirms you should receive the second stimulus payment automatically. If you have not yet received your first stimulus payment, you likely will need to file a 2020 tax return to obtain both the first and second round of stimulus checks—please check this site for updates about how to do so in late January 2021. Note that you may need to file a 2020 tax return even if you applied for your EIP before the deadline, because the IRS was unable to process all claims in time. As explained below, please note that state jails and prisons are not allowed to take portions of the CAA stimulus payments to pay off any debts.
For more details about this round of payments, please read our analysis below.
The Consolidated Appropriations Act (CAA) of 2021, H.R. 133, was signed into law on December 27, 2020. Section 272 of the law provides for additional 2020 recovery rebates for individuals, commonly known as stimulus checks or economic impact payments (EIP 2020). This law will be codified at 26 U.S.C. Section 6428A, and provides for the following:
- Eligible taxpayers will receive $600 if filing individually, or $1,200 if filing jointly, plus $600 for each qualifying child. The credit will be reduced by 5% of any income received by any individual over $75,000; by heads of households over $112,500; and by joint tax filers over $150,000.
- Eligible individuals include U.S. Citizens and Legal Permanent Residents with a valid Social Security Number. People who are incarcerated are not excluded from this round of payments.
- Note: The first round of stimulus checks under the CARES Act prohibited payments to joint tax filers if one spouse lacked a valid Social Security Number. That prohibition has been removed retroactively and does not apply to the second stimulus payment either. Now, if only one spouse has a valid Social Security Number, the stimulus amount is reduced from $1,200 to $600, unless one spouse served in the Armed Forces at any time in 2020. If neither spouse has a valid Social Security Number, the amount is reduced to zero. Valid social security numbers must also be included for each qualifying child. If you did not receive a CARES Act payment for this reason, you may now attempt to obtain both the first and second stimulus credits when you file a 2020 tax return.
- Advance payments are required to be made by January 15, 2021 for people in the States and Washington D.C. If an eligible individual in those places does not receive their payment automatically by that date, they may claim it by filing a 2020 tax return.
- Automatic payments will be based on information provided in 2019 tax returns. If you filed an online or paper claim for the CARES Act stimulus payment, that counts as filing a 2019 tax return and so you should receive your second stimulus payment automatically without further action. Please note that if you filed a paper claim but did not receive your first stimulus payment, it is likely that the IRS did not receive and/or did not process your tax return before the end of 2020. If that is the case, it is unlikely it will do so before the January 15, 2021 deadline. You can still receive both stimulus payments by filing a 2020 tax return, but you will have to wait longer for your payments.
- The second round of stimulus checks are protected from debt collection, including by states and prisons.
- Section 272(d)(1) of the Consolidated Appropriations Act provides that the IRS may not apply reductions or offsets under 31 U.S.C. Sections 3716 and 37201A or 26 U.S.C. § 6402, including for overdue state or federal taxes or child support.
- Section 272(d)(2) of the Consolidated Appropriations Act provides that the second round of stimulus checks “shall not be transferable or assignable, at law or in equity, and no applicable payment shall be subject to execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.” This means that this round of stimulus checks may not be garnished to cover overdue debts by federal or state prisons.
If you need to file a 2020 tax return to obtain your stimulus payments, please return to our website later in January 2021. We will post an update once the IRS has published information about how to do so.
If you have questions, you may contact us.