Both the first and second Economic Impact Payments, which were paid in April and then in December of 2020, were an advance of the refundable Recovery Rebate Credit.
The Economic Impact Payments are not taxable income and will not be reported as gross income. Both payments will be reconciled on the 2020 Individual Income Tax Return.
Qualified individuals who have not received the Economic Impact Payment(s), will receive them on their tax return through the refundable Recovery Rebate Credit.
Check your Economic Impact Payment(s) status here:
https://www.irs.gov/coronavirus/economic-impact-payments (no longer available as of March 11, 2021)
Individuals who do not qualify:
nonresident alien
dependent (a qualifying child or qualifying relative) (individual whose Personal Exemption is claimed on someone else's tax return)
an estate or trust
individual and/or dependent whose valid SSN or adoption taxpayer identification number are not shown on the tax return
individual who uses an ITIN
an exception to the ITIN rule is, if one of the spouses is a member of the Armed Forces, then, their spouse, if they do not have a valid SSN, would qualify
Someone was deceased before 2020 (2nd Economic Impact Payment)
Individuals who do not qualify, but did receive the advance, will not need to pay the Economic Impact Payment back. At this time there is no guidance for repayment.
For qualified individuals, the Recovery Rebate Credit is reduced by 5% of the Adjusted Gross Income (AGI) of the portion which exceeds:
$150,000 AGI - Married Filing Joint or Surviving Spouse
$112,500 AGI - Head of Household
$75,000 AGI - All other filing statuses
1st Economic Impact Payment
As a result of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was passed on March 27, 2020, an Economic Impact Payment was paid out to individuals in April of 2020.
The 1st Economic Impact Payment was calculated based on the 2019 filed tax return; or the 2018 filed tax return if the 2019 return was not filed. If neither a 2018 or 2019 tax returns were filed, the advance refund was calculated based on Form SSA–1099, Social Security Benefit Statement, or Form RRB–1099, Social Security Equivalent Benefit Statement.
Taxpayers who received the Economic Impact Payment, should have received a letter, Notice 1444, with the amount paid out. The letter should be kept on file for filing the 2020 income tax return.
Payment amount:
$2,400 Married Filing Joint / $1,200 all other filing statuses
plus
$500 per qualifying child
More Information:
IRS > Economic Impact Payment Information Center
Reference:
26 U.S. Code § 6428 - 2020 Recovery rebates for individuals
2nd Economic Impact Payment
As a result of the COVID-related Tax Relief Act of 2020, signed on December 27th, 2020, the 2nd Economic Impact Payment was sent out at the end of December 2020.
The 2nd Economic Impact Payment was calculated based on the 2019 filed tax return.
Taxpayers who received the Economic Impact Payment, should have received a letter, Notice 1444-B, with the amount paid out. The letter should be kept on file for filing the 2020 income tax return.
Payment Amount:
$1,200 Married Filing Joint / $600 all other filing statuses
plus
$600 per qualifying child
More Information:
Reference:
H.R. 133 (116th): H.R. 133: Consolidated Appropriations Act, 2021 > Division N > Title II > Subtitle B > Section 272