Stimulus checks round 1 went to dead people: Is the IRS better prepared for round 2?

The IRS and the Treasury Department have begun sending out $600 economic impact payments to American households, the second round of direct payments issued since the outbreak of the coronavirus pandemic last March.

However, the second time should be simpler and more efficient considering the IRS and Treasury Department have already completed much of the leg work. This means snafus like sending the payments to deceased individuals, a pitfall during round one, is less likely.

Now, the agencies have individuals on file who are eligible for the payments, including many of those who do not file tax returns but had signed up through the online web portal.

The phase-out threshold, however, is lower this time when compared with the payments distributed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Another change that the agency will have to account for is that households where only one spouse has a Social Security Number are eligible.

STIMULUS CHECKS ROUND 2: WHAT TO EXPECT

Most people will receive their payments in the same manner as the last round – direct deposit, check or prepaid debit card. In a press release on Tuesday, the IRS reiterated that people will not have to take any action to receive the money.

More individuals gave their direct deposit information to the agency, which further simplifies the process for the U.S. government.

People who did not receive either the first or second economic impact payment this year, but are eligible, will be able to claim it when they file their taxes in 2021.

Besides reaching all eligible households, earlier this year checks were sent to ineligible individuals – ranging from decedents to nonresident aliens.

The IRS has since clarified that neither group is eligible for payments, which should help to reduce their distribution.

Additionally, Sen. Maggie Hassan, D-N.H., tweeted last week that she and several other senators had worked to ensure that veterans, Social Security and Supplemental Security Income beneficiaries receive their payments, which had been a problem with the first round.

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Treasury Secretary Steven Mnuchin announced on Tuesday night that the government would begin sending paper checks on Wednesday, and would start issuing direct deposits starting Tuesday and continuing through next week. That means some people should already have their cash.

It typically takes about two weeks for a paper check to arrive.

Currently, the U.S. government is working off of the $600 payment amount ($1,200 for couples) stipulated under the recently approved legislation. Congress is considering legislation to raise that amount to $2,000 – and if that measure passes, the IRS said payments will be “topped up as quickly as possible.”

Individuals earning up to $75,000, or $150,000 for married couples are eligible for the full dollar amounts.

Beyond those income thresholds, the payments would begin to phase out at a rate of $5 per $100 of additional income.

Individuals earning more than $87,000 and married couples earning more than $174,000  – will be ineligible for payments.

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A spokesperson for the IRS has been contacted for comment.