Economic Impact Payments (EIPs), often called stimulus payments, were a key financial relief measure introduced by the U.S. government during the COVID-19 pandemic. These payments were designed to help individuals and families navigate the economic disruptions caused by widespread job losses, reduced income, and other financial challenges.
They provided a critical safety net for millions of households during an unprecedented time of uncertainty.
The government issued three rounds of EIPs, each authorized under different pieces of legislation:
- First Round (2020): The CARES Act provided payments of up to $1,200 per adult and $500 per qualifying child. This initial stimulus targeted lower- and middle-income households, with eligibility phased out at higher income levels.
- Second Round (2021): The COVID-Related Tax Relief Act offered payments of up to $600 per individual and $600 per qualifying child. These payments were smaller but reached many of the same households.
- Third Round (2021): The American Rescue Plan Act increased payments to $1,400 per individual and $1,400 per qualifying dependent, including dependents of all ages, such as college students and elderly parents.
Each round aimed to provide targeted financial assistance while reflecting the evolving needs of households as the pandemic continued.
How Were EIPs Distributed?
The IRS relied on existing tax data to deliver payments quickly. Methods included:
- Direct Deposit: Payments were sent to the bank accounts provided on recent tax returns.
- Paper Checks: For those without direct deposit information on file, checks were mailed to the last known address.
- Prepaid Debit Cards: Some individuals received their payments on reloadable debit cards for added convenience.
If taxpayers did not receive their payments through these methods, they could then claim the amount as a Recovery Rebate Credit on their tax returns.
Although most eligible taxpayers received their payments, some may have missed out due to changes in income, dependency status, or tax filing issues. Recent IRS efforts to issue automatic payments aim to correct these oversights, allowing those who were overlooked to receive what they’re owed.
In the next slide, we’ll explore how to check whether you’ve claimed all your EIPs and what to do if you haven’t.
By Admin –
