How to check the status of your Second Stimulus check?

by | Feb 28, 2021 | Tax Planning, Tax Preparation

How to check the status of your Second Stimulus check

How to check the status of your Second Stimulus check?

 

The US Government has come up with a new coronavirus relief package and the second stimulus check for providing a considerable amount of financial support to the Americans during times of pandemic.

The dispatch of the Second Stimulus Check for millions of Americans had already started. However, there had been an error committed by the IRS while the dispatch of the Second Stimulus Checks. This has caused a lot of Second Stimulus payments to be deposited into different wrong accounts. As a result, millions of Americans have not been able to receive their Second Stimulus payments yet. 

However, the IRS has confirmed that it has been working very fast on this error and the funds have been re-deposited into the respective accounts again. So, those Americans who are waiting anxiously for obtaining their Second round of Stimulus payment would be receiving it soon.

Get My Payment Portal

 If you are wondering about the status of your Second Stimulus check or payment, then the “Get My Payment” tool of the IRS would be of great help to you. This tool can be considered as an updated version of the IRS tool that was used to track the status of your First Stimulus Check payment.

The “Get My Payment” Portal would help obtain the below-mentioned information.

  1. It would help in checking the status of your Stimulus payment.
  2. The tool would also help in the confirmation of the type of payment to be used for obtaining the Second Stimulus Payment i.e. either by the Direct Deposit method or by the Paper Check method.
  3. The “Get My Payment” tool would also help receive a tentative or projected delivery date for the Direct Deposit or the Paper Check method.

However, there are some changes in the tool for the Second Stimulus Payment round. The bank account information in the “Get My Portal” cannot be changed or entered for the payment to be directly deposited into the bank account. The IRS is using the information it already has in the Tax return file to issue the Second Stimulus payment.

The IRS would obtain the bank account information for an individual from the below-mentioned:-

  1. The tax returns of 2019 or
  2. The online registration tool of the IRS that was used by the non-filers for receiving the first round of the Stimulus payments or
  3. Any federal agency which is sending benefits such as the Railroad Retirement Board, Veteran Affairs, Social Security Administration, etc. or
  4. “Get My Payment” Portal if the information has been entered before 22nd December 2020.

 

Moreover, it might have happened that the Second Stimulus check payment was sent with the help of mail as the deposit was not accepted by the bank. The major reason underlying this can be incorrect bank account information. There might have been a delay in your receipt of the payment if the post office would not have been able to deliver the payment to you.  However, you cannot use the “Get My Payment” tool for updating your current address. 

 

Access denial with the Get My Payment tool

 

Taxpayers might face the issue of access denial while trying to check their Second Stimulus check payment. Some of the major causes which can be responsible for the access denial can be:-

 

  1. If you have not filed your tax returns for the year 2019
  2. If you have not used the tool “Non-filers: Enter Payment Here” by November 2020 for receiving the first round of your Stimulus Check payment.
  3. If the IRS does not have adequate information from any federal agencies for processing your payments as you had been receiving Social Security benefits and other federal benefits from these agencies.

 Conclusion

 So, with financially difficult times dooming all over the US it is quite obvious for people to be anxious about the status of their Stimulus payment. The “Get My Payment” tool would help have an idea about your payment and even understand the cause behind the delay.

All about the New Coronavirus relief package and a second stimulus check for the NRIs in the US

by | Feb 25, 2021 | tax filing, Tax Payers, Tax Professionals, tax reduction

All about the New Coronavirus relief package and a second stimulus check for the NRIs in the US

 

On 27th December 2020, the US Government had signed the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 into law. According to this law, a relief package of $900 billion would be delivered to the Americans as a second round of economic stimulus due to the pandemic COVID-19. This bill would help in providing relief to the Americans through the various provisions which have already been put in place by the CARES Act. 

Let us have a look at what this new Coronavirus relief package would include.

Stimulus Payments

Another wave of Stimulus payments for the Americans has begun. This Stimulus payment would be up to $600 for the eligible taxpayers, $1200 for those taxpayers who are filing their tax returns jointly, and also an additional amount of $600 for a dependent child who is below the age of 17 years.  So, if there is a family with two children then they would receive a Stimulus payment of approximately $2400. 

The NRIs in the US do not have to do anything special for being eligible to receive the Stimulus payment. The Stimulus payment would be done by the IRS by using the latest information which is present on the tax returns of the year 2019.

Who would be eligible to receive the Second Stimulus payment?

  • If you are filing your tax returns as a Single and having an AGI (Adjusted Gross Income) of up to $75,000 or if you are married and are filing your tax returns jointly with an AGI of up to $150,000 then you would be eligible for receiving the Stimulus Check.

  • For those NRIs who are filing their tax returns as single and have no qualifying dependents, the Stimulus Check payment would phase out at $87,000 and for married couples filing their tax returns jointly without any dependents the payment would phase out at $174,000.

     

  • There are possibilities of more households being eligible for obtaining the Second Stimulus payment as this bill would expand stimulus payment for those households which have a mixed-status i.e. different categories of immigration and citizenship statuses as well.

     

  • Also, those NRIs who were receiving Railroad Retirement, Social Security Retirement, or SSI income would receive the Stimulus payment without filing a tax return.

 By when would you receive your Second Stimulus payment?

 If you have not received your Second Stimulus payment yet, then you would be receiving it very soon. There have been some errors by the IRS due to which lots of Stimulus payments have been done to wrong accounts.  However, according to the IRS updates the payment for those affected by this error has been done by 8th January and many Americans must have received them too by now.

Extended Unemployment

There has been an increase in the unemployment payments and this would be $300 each week now. These benefits would be extended until 14th March 2021 now. According to this new bill, there has also been an extension to the Pandemic Unemployment Assistance (PUA). This implies that the freelancers and self-employed NRIs in the US can continue to obtain Unemployment benefits.

Moreover, some NRI workers earn a minimum amount of $5,000 in a year but are not able to avail the benefits of the Pandemic Unemployment Assistance as they have an employer. But, now with this New Coronavirus relief package, these workers can even avail the benefit of receiving $100 extra in a week as Unemployment benefits.  

The EITC and CTC

The New Coronavirus relief package would help the Americans having low income in using their income from the year 2019 for determination of their EITC (Earned Income Tax Credit) and even that part of the Child Tax Credit (CTC) which is refundable.

Expansion of the PPP 

Under the New Coronavirus relief package, the NRIs can also receive a second round of payments under the PPP (Paycheck Protection Program). Due to the expansion in the Paycheck Protection Program; there has been an expansion in the category of business expenses which can be forgiven under those loans that have been taken for meeting the supplier costs.

Contractor Paid Leave

Those contractors who have not been able to work for a temporary period due to the restrictions like the closure of facilities would receive reimbursement for their paid leaves taken. 

Eviction Moratorium and Rent Assistance

Furthermore, the New Coronavirus relief package provides an extension for the moratorium on evictions until 31st January 2021. Those families which are not able to pay their past rent or have problems related to future rent payments would be receiving financial assistance.

Extenders related to tax 

Tax extenders would be providing tax relief to individuals as well as NRI families with the help of mortgage relief, relief on medical and education expenses as well.

Conclusion

So, the New Coronavirus relief package and the second stimulus payment would help in providing some amount of financial assistance to the Americans during these difficult times thus, reducing the financial stress.

If your Income Tax Refund is delayed because of the PATH Act

by | Feb 23, 2021 | income tax, Income Tax Refund

If your Income Tax Refund is delayed because of the PATH Act

If your Income Tax Refund is delayed because of the PATH Act

 

The PATH Act was passed in the year 2015 and it would include some changes brought to the tax laws in the US. The PATH Act would include bringing up changes into the two major tax credits i.e. The Additional Child Tax Credit (ACTC) and the Earned Income Tax Credit (EITC). 

The refundable part of the ACTC is known as the Child Tax Credit (CTC). EITC is a mean-based tax credit that is refundable and it’s worth would be more than $6,000. 

The PATH (Protecting Americans from Tax Hikes) Act was signed into a bill in the year 2015. According to the PATH Act, the IRS will not issue refunds which would include the EITC and ACTC before the mid of February.

The PATH Act applies to all tax preparation methods and its main objective is to help in detecting and prevention any tax frauds. Moreover, by the extension in the release of refund, the IRS gets time to ascertain that the taxpayers are properly claiming their tax credits.

PATH Act and the Extended Tax Credits  

Those taxpayers who are willing to claim the ACTC (Additional Child Tax Credit) can avail a significant break on their federal income tax. This break can be up to 15% of the income the taxpayer family has earned above the initial threshold of $3000.

Let us illustrate this with the help of an example.

  1. Suppose, a family has an income of $40,000 then the refund of 15% would be applied on the $37,000 which is the amount that is left after the threshold of $3000 has been applied.
  2. The expiring tax laws can raise this tax threshold to around $10,000 which can lower your tax refund amount but the PATH Act would help in keeping the threshold fixed at $3000 permanently.

Similarly, the PATH Act would help in permanently increasing the phase-out threshold for the EITC (Earned Income Tax Credit) by an amount of $5000 for those who are married and filing their tax returns jointly. This implies that those couples who have earned more than $5000 would have been originally allowed might now receive the complete EITC for their income. 

Some additional changes to the EITC

There have been some additional changes to the EITC by the PATH Act which can have an impact on your tax returns. 

  1. The Social Security Number (SSN) is always necessary to claim the EITC. However, according to the older tax laws the credit could have been claimed even for those years for which the taxpayer did not have an SSN.
  2. By the PATH Act, EITC cannot be claimed for those years in which the taxpayer did not have a valid SSN. 
  3. Taxpayers who are claiming the EITC by erroneous means can be penalized by the IRS under the provisions of the PATH Act. This can also restrict the taxpayer from claiming the EITC credit for the upcoming 10 years.

Delay in the tax refunds

Most of the taxpayers who are claiming the EITC and ACTC would be experiencing a delay in the receipt of their tax refunds. According to the PATH Act’s provisions, the IRS should withhold the tax refund for those taxpayers who are claiming these credits till 15th February 2021.

In case, a taxpayer is filing his tax returns before 15th February then he owes a tax refund and in case he is claiming the EITC or ACTC then the refunds would be withheld until the 15th February deadline.  By this delay, the IRS would get a considerable amount of time to match up the information present on a taxpayer’s tax returns and the respective W-2 forms.  This would help detect and prevent identity thefts and tax frauds. 

According to the IRS, if a taxpayer has claimed the EITC and ACTC then he can expect to obtain his tax refund by the first week of March. This would be feasible if the below-mentioned conditions are satisfied:-

  1. The tax returns are filed online by the taxpayer
  2. The taxpayer would get his refund by Direct Deposit
  3. There have been no issues found with the filing of the tax returns

Conclusion

Hence, if the credits EITC and the ACTC are being claimed then the taxpayer must be prepared to experience a delay in receiving their tax refund. The refund status can always be checked by using the “Where’s My Refund” tool or by using the IRS2Goapp.

 

All you need to know about your Income Tax Refund Status

by | Feb 20, 2021 | Blog, Income Tax Refund, Tax Refund

All you need to know about your Income Tax Refund Status

All you need to know about your Income Tax Refund Status

 

One of the most common questions of the taxpayers during the tax season is “Where is my tax refund?” The IRS would start its tax refund processing from 12th February and the refunds would have to go through mainly three stages.

  1. The Return received
  2. The Return approved
  3. The Refund sent 

 The time is taken for the refund processing

 In general, the time taken for processing the Income Tax Refund by the IRS would depend upon the mode that has been used for filing Income Tax Returns.

Tax returns filed by Direct Deposit

 When you are filing your tax returns electronically with the Direct Deposit method, you can obtain your tax refunds soon. According to the IRS, within 21 days after acceptance of the Income Tax returns the refund is done for most of the citizens.  

 Tax returns filed by mail

 If the Income Tax returns have been filed by paper then it will take some time and this time might be longer due to the outbreak of the pandemic COVID-19. It has been advised by the IRS to wait for 4 weeks after filing your tax returns before you start checking the status of your tax refund. Also, this processing of tax refund can take longer and can be around 6 to 8 weeks.

Refunds obtained with EITC or ACTC

 The IRS would not be issuing any refunds before mid of February for those tax refunds which would include the EITC (Earned Income Tax Credit) and the ACTC (Additional Child Tax Credit). This rule is applicable under the PATH (Protecting Americans against Tax Hikes) Act. This Act mainly aims at the detection and prevention of tax fraud and applies to all tax preparation methods. By this extension in the refund period, it will give the IRS much more time to ensure that the taxpayers are claiming the tax credits properly. For the filers of the EITC and the ACTC, the IRS considers completing the refund by the first week of March.

 The Process of Income Tax Refund

Let us have a look at the process which is involved in the processing of the Income Tax refund for US citizens.

Status checking after 24-48 hours from e-filing

After filing Income Tax returns, the taxpayers can easily check their status by the use of the IRS tool i.e. “Where’s My Refund?” The major requirements for checking your refund status are the Social Security Number or the ITIN, the exact amount which must be refunded, the filing status of the taxpayer, etc. 

Notice of the Return Received

Once the processing for the Income Tax return has been started by the IRS, the “Where’s My Refund” tool would highlight the status as “Return Received”. Taxpayers would not be able to view their Tax refund date unless the tax return processing has been finished by the IRS and the tax refund has been approved by the IRS.

Change in status 

With the IRS finishing the processing of tax returns and providing confirmation about the approval of tax refund, the status of the “Where’s My Refund” tool would be changing to “Return Approved” from “Return Received”.

Refund Date on Refund tool

Once the status of the tax refund has changed to “Refund approved” a personalized refund date would be specified by the IRS. 

Refund Status on the tool 

In case of your status on the “Where’s My Refund?” tool shows “Refund Sent”, then it means that the tax refund has been sent to the taxpayer’s financial institution for Direct Deposit. If opted for direct deposit, then it usually takes around 1-5 days for the financial institution to fund the deposit into the taxpayer’s account. However, if opted for a tax refund via electronic mail it can take some weeks for the tax refund’s arrival. 

However, despite the simplified procedure taxpayers can have many other questions related to their Tax Refund such as “I have not received my tax refund even the tax return has been received by the IRS since 21 days”, “I have got my tax refund in the form of a cheque even though I had opted for Direct Deposit”, etc. In many cases, the refund can take a long time if there has been an error in the tax return filing or if incomplete information has been received. Moreover, the limit for direct deposits into a particular bank account has been limited to 3 tax refunds in a year. Your limit might have been exceeded. 

Conclusion

So, if the tax refund processing timeline has been exceeded and the anxiety is rising about its status the “Where’s My Refund?” tools can be helpful. Or else you can consider connecting with the IRS support over the phone and enquire more about your status.

If your Holiday Bonus was also taxed?

by | Feb 19, 2021 | Tax Extension, Tax Planning, Tax Preparation

If your Holiday Bonus was also taxed

If your Holiday Bonus was also taxed?

 

December is the holiday season and the perfect time for giving gifts. It is the time when your employer might even plan about giving bonuses to you. This would reflect a sense of gratitude towards you for the good services you have provided across the year. When you come across the news that you would be receiving a bonus this holiday season, it’s obvious for you to make certain plans about how to spend your extra income you receive.

However, you must remember that the holiday bonuses you receive would be considered as compensation exactly in the same way as that of your salary paychecks. So, taxes would be withheld from the holiday bonus you receive. 

Now, let us have an idea on how and in which way the holiday bonus you receive would be taxed.

Social Security Tax

In the year 2020, you would have to pay Social Security tax on all the compensation you have received up to $137,700.However, if you have not reached up to that limit, and then your employer would deduct around 6.20% from the bonus you would obtain for the purpose of Social Security.

Federal Income Tax

When you are receiving your bonus and it is an additional income for you, then the IRS would definitely withhold a flat percentage from your bonus.  Earlier, the federal income tax rate which would be withheld on the bonus was 25% which has been reduced to 22% now. Moreover, your employer can combine your salary and bonus and then withhold the taxes from the entire amount. This would be much higher than 22% but you should be assured that the money which has been withheld would not be lost. The tax rates on your bonus would be much higher than the actual tax rate levied on the total income you have earned. So, while filing your tax returns you would get back some of the amounts as your federal tax return.

 Medicare Tax

You would be paying Medicare taxes on all the compensation that you have received and hence, another 1.45% would be deducted in the form of Medicare Tax.

 State  Income Tax

 Most of the states would impose Income Tax separately on the bonus that you have received. So, the State Income Tax would be withheld at the same rate as determined by the State Law.

Contributions towards Retirement Plan

  In case, you have decided along with your employer to withhold a particular percentage from your salary as a contribution made towards your retirement plans such as a 401(k)plan or any other plan then it would be withheld from your supplemental income or bonus.  

 For example, if you and your employer have decided together on the withholding of 15% from your salary towards your retirement plan then 15% would be withheld from your bonus currently. So, this might be harder on your finances as of now but it will help in having a larger fund for your future after you retire.

 So, now by adding all this resulting amount would be deducted together from your supplemental income/bonus.  However, you must keep in your mind that today you would be obtaining the bonus and you can even get some amount back in the form of a tax refund  

 Conclusion

 Hence, if you are having some supplemental income in the form of a bonus then you are supposed to pay taxes on them.