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Kelly Phillips Erb

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Estimated reading time: 2 minutes

Traditionally, taxpayers who need assistance during the tax season can find programs that fit their needs. Unfortunately, due to COVID, 2021 already looks challenging. But don’t lose hope: help is still available.

VITA and TCE

The IRS isn’t ruling out opening Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites but they are not all open now. The IRS says that, “Due to COVID-19, a number of VITA sites and all TCE sites are closed for an undetermined period of time.”

VITA offers free tax help to taxpayers who generally make $57,000 or less, persons with disabilities, and limited English-speaking taxpayers who need assistance in preparing their own tax returns.

In addition to VITA, the TCE program offers free tax help for those who are 60 years of age and older, specializing in questions about pensions and retirement-related issues unique to seniors.

Some VITA sites are planning to open. To locate an open VITA site near you, use the VITA Locator Tool.

AARP Foundation Tax-Aide

Other services, like the AARP Foundation Tax-Aide, provide in-person and remote tax assistance free of charge. The AARP has a special focus on taxpayers who are 50 or older or who have low to moderate-income. 

Tax-Aide volunteers are located nationwide, and are trained and IRS-certified every year to make sure they know about and understand the latest changes and additions to the tax code. Tax help is provided in safe environments using a variety of methods based on a number of factors, including where you are located, COVID-19 spread, and volunteer availability. 

The Tax-Aide webpage will be updated in early February with new features to make it easier for taxpayers to request tax help. Meanwhile, you can find some of the answers to your questions using the AARP Tax Aide’s Frequently Asked Questions page on the AARP website.

Free File

And, of course, keep in mind that free tax software is available through Free File. Free File is a public-private partnership between the IRS and Free File Inc. Free File is available to taxpayers whose adjusted gross income (AGI) was $72,000 or less in 2020: you can find your AGI by looking at line 11 on Form 1040. You can find out more about Free File here.

Martin Luther King. Jr.
Library of Congress, Public domain, via Wikimedia Commons

Estimated reading time: 8 minutes

I am the only lawyer in my family. That’s important to my story because – as you’ll read in a minute – my thinking about the legal system, especially the criminal justice system, was largely shaped by popular culture. I grew up believing that as long as you did the right thing, you’d never be in trouble. I thought that folks who ended up in jail clearly did something wrong. I thought that justice was blind to race, gender, and economics. I now know that’s not the case.

More than 50 years ago, Dr. Martin Luther King, Jr., a leader in the civil rights movement, was on the receiving end of repeated harassment by tax authorities. Inquiries into Dr. King’s finances were not new: He was investigated in two separate states (Georgia and Alabama) on numerous occasions and together with his legal team and members of the Southern Christian Leadership Council (SCLC), Dr. King was repeatedly investigated by the Internal Revenue Service (IRS).

It was clear to many of his supporters that Dr. King was targeted because of the color of his skin and the words that he dared to speak about inequality. In 1960, he made news as the first person ever criminally charged in the state of Alabama on tax fraud (you can read the statement issued “Committee to Defend Martin Luther King, Jr.” accusing the state of Alabama of falsely distorting Dr. King’s 1958 income tax return in an attempt to indict him here).

After his indictment, Dr. King was asked by a reporter, “Have your income tax returns been investigated before?” He replied, “Oh yes, they have been investigated two or three times before. This is nothing new.” The case would eventually go to trial.

On today, Martin Luther King Jr. Day, as I always do, I am re-posting an article, without edits, that I wrote years ago about that trial and the legal profession. You might have seen it before: it remains one of my favorite posts to this day. It reminds me of how important it is to continually seek out justice. I hope you enjoy it.

I’ll be frank. I don’t always love being a lawyer.

When I was a little girl, I used to watch Perry Mason with my grandfather on TBS. That constituted my entire legal experience before entering law school. And it was flawed.

You see, on TV, none of the lawyers lied to Perry Mason over the phone about being amenable to a continuance and then told the Clerk of Court differently. Nobody faxed Perry Mason a witness list the day before a hearing along with evidence that they “forgot” to send prior. A lawyer didn’t claim proper service on Perry Mason and then fail to deliver the notices to his law offices. You never saw a lawyer represent clients who had sent Perry Mason death threats via email in an attempt to assert that Mr. Mason was the one being unreasonable. You didn’t see cases drag on for years and years (yes, plural) because counsel just couldn’t get it together enough to resolve the matter. On TV, no matter how dire, how dramatic, there was ultimately justice.

The law is supposed to be about justice, about finding the truth. And increasingly it feels like it’s not. It’s more about touting your wares, putting yourself on commercials during daytime television standing in front of legal books shouting about maximizing money, about doing anything to get paid. And that is sad.

A few months ago, I attended a hearing that made me question my role in the law. You’re probably assuming that the hearing somehow didn’t go well. That isn’t true. It went remarkably well. Our client was an excellent witness. The judge was fair and very accommodating. We walked out of the hearing knowing that we had done a good job. The thing was, I felt relieved that it was over. I was happy for my clients. But I wasn’t happy for me. Truth be told, I hated every minute of preparing for the case. Well, not every minute. The theory, the strategy? That I didn’t mind. Our strategy was simply to tell our story. And we somehow felt that should be enough. In the end, I think it was.

But the getting there? The games? The complete lack of professionalism exhibited by opposing counsel? Lying about continuances? Surprise witnesses? Last-minute evidence? Maybe that seems exciting on TV, but in real life, it’s not exciting. It’s sickening. It’s stressful. It’s not fair to good lawyers who spend their time crafting a case. It’s not fair to clients who don’t know what to expect in the courtroom. And yet somehow, month after month, this behavior doesn’t seem so unusual.

And as opposing counsel sat in her chair in her too-tight blouse with the clickety-click of her little heels on the floor, the same counsel who called my clients’ claims frivolous, the same counsel whose supervising partner at Big Law Firm once commented to me that she didn’t understand why a small firm like mine would go up against a big firm like hers, I thought about why we were all at that place, how it all happened that we were in the same room believing two different versions of the truth. I couldn’t explain it.

Later that same day, while reaching for my Moscow Mule (yes, my favorite cocktail du jour, even before Rachael Ray put it in her magazine last month – grr) at the Union League, I understood why the partner at my former firm kept a bottle of wine in his desk: the pressure of being a lawyer, the pressure of having to win, it’s a lot to take in. And while other professions can often look to each other for reassurance, we don’t really have that in the legal profession with few exceptions. It is, by its very nature, adversarial. It is competitive. It is cutthroat. And me? I am not. Of course, I like to win. I like to think that I am good at it. And then maybe I think that’s not something to be particularly proud of.

So, over the past few weeks, which have been professionally difficult, I have tried to remember why it is exactly that I became a lawyer – and what about it I used to love. And I was reminded of my favorite scene in the movie Philadelphia. The one where Andrew Beckett sums up what’s actually good about the law:

Joe Miller: What do you love about the law, Andrew?
Andrew Beckett: I… many things… uh… uh… What I love the most about the law?
Joe Miller: Yeah.
Andrew Beckett: It’s that every now and again – not often, but occasionally – you get to be a part of justice being done. That really is quite a thrill when that happens.

And so I tried to think of when that happened last – when justice was actually done. Not when I won a case or when I got a client out of trouble – that happens often enough. But remember, winning and justice aren’t the same thing. I had to think for a while.

Later, I was preparing to write a post about Martin Luther King, Jr. Day. I figured I’d just put up a copy of his famous “I Have A Dream” speech and call it a day. But as I researched, I found part of his autobiography which, I will confess, I had never read in full. And I saw something interesting: I knew that Dr. King had been arrested several times for various accusations, but I didn’t realize that he had been on trial for tax evasion.

Yep. On February 17, 1960, a warrant was issued for the arrest of civil rights leader Dr. Martin Luther King Jr. on charges of tax evasion. He was accused of allegedly falsifying his Alabama income tax returns for the years 1956 and 1958; he was the only person ever prosecuted under the state’s income tax perjury statute. It seemed like an inevitable victory for the government.

In his autobiography, Dr. King described the trial like this:

This case was tried before an all-white Southern jury. All of the State’s witnesses were white. The judge and the prosecutor were white. The courtroom was segregated. Passions were inflamed. Feelings ran high. The press and other communications media were hostile. Defeat seemed certain, and we in the freedom struggle braced ourselves for the inevitable. There were two men among us who persevered with the conviction that it was possible, in this context, to marshal facts and law and thus win vindication. These men were our lawyers-Negro lawyers from the North: William Ming of Chicago and Hubert Delaney from New York.

And something quite remarkable happened. On May 28, 1960, only after a few hours, Dr. King was acquitted by an all-white jury in Montgomery, Alabama (statement downloads as a PDF).

Dr. King said about his trial:

I am frank to confess that on this occasion I learned that truth and conviction in the hands of a skillful advocate could make what started out as a bigoted, prejudiced jury, choose the path of justice. I cannot help but wish in my heart that the same kind of skill and devotion which Bill Ming and Hubert Delaney accorded to me could be available to thousands of civil rights workers, to thousands of ordinary Negroes, who are every day facing prejudiced courtrooms.

And it dawned on me: no matter how many slick-haired, silver-tongued attorneys do their best to make a quick buck at the expense of the reputation of the profession, you can’t dispute that justice is attainable. And justice is good. And justice is important. And even if it is infrequent, it’s worth it when it happens.

Estimated reading time: 3 minutes

The Internal Revenue Service (IRS) has announced that tax season will open on Friday, February 12, 2021. Yes, on a Friday.

The IRS will begin accepting paper and electronic tax returns that day. This is about two weeks later than had been expected. The delay allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes – especially those involving a second round of stimulus checks (Economic Impact Payments, or EIPs).

Ways and Means Committee Chairman Richard E. Neal (D-MA) said, about the date, “While I am disappointed that this year’s filing season will begin later than usual, I recognize that the IRS has faced extraordinary challenges throughout the COVID crisis. It’s a relief to know that despite contending with the distribution of two rounds of economic impact payments, facility closures, and other disruptions, the agency will be able to begin accepting returns within the next month. It is also encouraging that the IRS expects taxpayers who file electronically at the beginning of the season and claim refundable tax credits to receive their refunds by the first week of March. I urge taxpayers to complete their returns and file electronically as early as possible.”

The IRS also had a comment. “Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time,” said IRS Commissioner Chuck Rettig. “Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.”

Every year, taxpayers have questions about early filing. Many software companies and tax professionals will accept tax returns before opening day. That doesn’t mean that your tax return will be filed early. Those software companies and tax professionals will submit returns when IRS systems open. The IRS strongly encourages people to file their tax returns electronically for faster refunds.

Last year’s average tax refund was more than $2,500. More than 150 million tax returns are expected to be filed this year, with the vast majority before the Thursday, April 15 deadline. While there has been extensive discussions among tax professionals about an extension, so far, that’s just talk. According to the IRS, the tax return deadline remains April 15, 2021.

The delayed start date may ease the waiting game for some taxpayers. Remember, as reported in prior years, the law now requires the IRS to hold refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until February 15 – that’s just a few days after the season opens. Plan accordingly.

Remember that the rule which bars IRS from issuing refunds for taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February applies to the entire refund – even the portion not associated with the EITC and ACTC.

And don’t forget that Free File is officially open. If you use Free File, you can do your taxes now. The Free File provider will then submit the return once the IRS officially opens tax season and starts processing tax returns. You can find out more here.

The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days. Taxpayers can check out Where’s My Refund? on IRS.gov or the IRS2Go phone app for projected deposit dates.

Estimated reading time: 3 minutes

Ready to file your 2020 tax return? The Internal Revenue Service (IRS) hasn’t officially announced the start date to the new season, but the website indicates that Free File is officially open.

Free File is available to taxpayers whose adjusted gross income (AGI) was $72,000 or less in 2020. You can find your AGI by looking at line 11 on Form 1040. The amount includes income less any adjustments (sometimes called above-the-line deductions) and is calculated before claiming the standard or itemized deductions. That means that it applies to most taxpayers.

Even though there’s no official IRS start date published, if you use Free File, you can do your taxes now. The Free File provider will then submit the return once the IRS officially opens tax season and starts processing tax returns.

“As we continue to confront the COVID-19 pandemic, IRS Free File and certain other similar online tax preparation products such as MilTax – Tax Services for the Military offered through the Department of Defense − offers taxpayers a free way to do their taxes from the safety of their own home and claim the tax credits and deductions they are due,” said Chuck Rettig, IRS Commissioner. “We encourage eligible taxpayers to take a look at using Free File, MilTax and similar free online tax preparation products this year, to follow the lead of over 4 million people who took advantage of these free services just last year. An IRS tax refund is often the single largest payment families receive during the year. We know how critical that refund is, especially this year.”

Since its 2003 debut, Free File has served tens of millions of taxpayers. Free File is a public-private partnership between the IRS and Free File Inc. (FFI). Free File has been the center of some controversy in recent years, with allegations that some providers were leading taxpayers to paid services when they should have been directed to the free services. That should be changing: As of last year, tax preparation software companies are prohibited from hiding free filing services from Google or other search results pages. Additionally, if you don’t qualify for an IRS Free File offer after visiting a company’s Free File website, you can head back to the Free File website to find another offer. Each IRS Free File company must provide you information when you don’t qualify, with a link back to the IRS.gov Free File site.

So how does it work? Click over to IRS.gov/freefile to see all Free File options. If you know which software partner you want to use, you can click straight through. Otherwise, you can use a “lookup” tool to help you find the right product.

Not every Free File partner has the same eligibility criteria: it may vary based on income, age, and state residency. However, most companies provide a special offer for active-duty military personnel who earned $72,000 or less regardless of the company’s other eligibility standards.

Additionally, some but not all partners offer free prep and filing for state returns. Check the fine print before you start your return. Any state preparation or non-qualifying fees are required to be disclosed on the company’s Free File landing page.

If you used Free File last year, you should receive an email from the same company product that you used, welcoming you back to Free File. The email should include a link to the company’s Free File online program and explain how to file with the program. You don’t have to use the same company: it’s intended to help you get started if you want to use the same program.

You can only file your current year tax return using IRS Free File. You cannot process a prior year return using IRS Free File.

Free File is typically available through the extension date, which is October 15, 2021.

Estimated reading time: 3 minutes

With all of the last-minute changes to the Tax Code – and those stimulus check reconciliations – it was clear that the Internal Revenue Service (IRS) was going to have to make revisions to tax forms used to file 2020 tax returns (the tax returns that you’ll file in 2021). Most tax professionals expected a delay in getting those forms together, but the IRS has issued a statement confirming that “updates to key federal tax forms and instructions are complete and will be available when Americans begin filing their tax returns.”

Most taxpayers file Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors. Last month, the IRS released the very-probably-unless-Congress-does-something-soon final version of Form 1040 for 2020. There were several notable changes to the form for the tax year 2020: you can read about them here.

The IRS says that those returns are ready, and that they have shared the updates with its software and industry partners. Forms 1040 and 1040-SR and the associated instructions are available now on IRS.gov and are being printed for taxpayers who need a hard copy.

Stimulus Checks

A key change on the returns is the reconciliation for the Economic Impact Payments, or stimulus checks. Those checks are an advance payment of the Recovery Rebate Credit. It’s important to note that:

  • Anyone who didn’t receive the full amount of both stimulus checks should include the amounts they received, before any offsets, when they file. This includes taxpayers who did not receive the proper amount for their dependents.
  • Anyone who received the full amount for both stimulus checks should not include any information about the payments when they file their tax return.
  • The stimulus checks will not reduce the amount of your refund.
  • The stimulus checks are not taxable.

You can read more about stimulus checks here.

Changes To Form 1040

Also new on the returns is the option to use your 2019 income amounts when computing the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). This is the result of the additional stimulus bill passed in December and significantly impacts those families whose incomes were reduced because of COVID since your credit is typically higher as you earn more money.

And, of course, with Bitcoin riding high, don’t forget about cryptocurrency. A question about cryptocurrency ownership has been moved to the front page of Form 1040. You can find out more about that – and form other changes – here.

IRS Filing Season Start Date

The IRS has not yet announced a start date for the 2021 filing season. Last year, the IRS announced on January 6, 2020, that the filing season would open on January 27, 2020. Most forms W-2 and other tax forms are due to taxpayers by February 1, 2021 (find out more here).

Last year, FreeFile opened on January 11, 2020. The IRS says that IRS Free File “will open in mid-January” when participating providers begin accepting returns. However, according to the IRS, Free File providers will accept completed tax returns and hold them until they can be filed electronically with the IRS when the tax season opens.

Check back for more information.

For years, Treasury has advised taxpayers that virtual currency is not required to be reported on the Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts, or what used to be called the FBAR. That appears to be changing. FinCEN has now announced an intention to amend the rules to require FBAR disclosures for virtual currency like Bitcoin.

Currently, United States persons are required to file an FBAR if they hold a financial interest in or signature authority over at least one financial account located outside of the United States if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year. The reporting obligation may exist even if there’s no associated taxable income. If you fail to file an FBAR, you can be socked with some pretty hefty penalties: up to $10,000 per violation for non-willful violations and up to $100,000 or 50% of the balance in the account for willful violations.

For purposes of the FBAR, a financial account is defined as a bank account, such as a savings, demand, checking, deposit, time deposit, or any other account maintained with a financial institution or other person engaged in the business of a financial institution. It also includes an account set up to secure a credit card account; an insurance policy having a cash surrender value is an example of a financial account; securities, securities derivatives, or other financial instruments account; mutual funds and and similar accounts in which the assets are held in a commingled fund and the account owner holds an equity interest in the fund.

(You can find out more about FBAR requirements – as they stand now – in a recent edition of the Taxgirl podcast here.)

In 2014, the Internal Revenue Service (IRS) was still trying to wrap its head around Bitcoin. That year, it issued guidance to taxpayers on how to treat Bitcoin – and other virtual currency – for federal income tax purposes. Saying that “virtual currency is not treated as currency that could generate foreign currency gain or loss for US federal tax purposes,” the IRS determined that Bitcoin and similar currencies are to be treated as a capital asset. You can read Notice 2014-21 here (downloads as a PDF).

(You can find out more about cryptocurrency – and how it’s taxed – on the Taxgirl podcast here.)

But Notice 2014-21 didn’t specifically mention the FBAR. And the income tax treatment of assets is not the same as the reporting requirements for FBAR purposes.

On June 4, 2014, Rod Lundquist, a senior program analyst for the Small Business/Self-Employed Division, was asked about this issue and confirmed that, for FBAR purposes, Bitcoin was not reportable “…not at this time.” He followed up by saying that “FinCEN has said that virtually currency is not going to be reportable on the FBAR, at least for this filing season.”

The IRS further confirmed that treatment, stating, “The Financial Crimes Enforcement Network, which issues regulatory guidance pertaining to Reports of Foreign Bank and Financial Accounts (FBARs), is not requiring that digital (or virtual) currency accounts be reported on an FBAR at this time but may consider requiring such accounts to be reported in the future. No additional guidance is available at this time.”

Now, FinCEN is taking a different tack. On December 30, 2020, FinCEN published a short notice. That notice, FinCEN Notice 2020-2, reads:

Currently, the Report of Foreign Bank and Financial Accounts (FBAR) regulations do not define a foreign account holding virtual currency as a type of reportable account. (See 31 CFR 1010.350(c)). For that reason, at this time, a foreign account holding virtual currency is not reportable on the FBAR (unless it is a reportable account under 31 C.F.R. 1010.350 because it holds reportable assets besides virtual currency). However, FinCEN intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account under 31 CFR 1010.350.

(Emphasis is mine.)

You can read the notice here (downloads as a PDF).

It’s clear that the IRS is getting serious about cryptocurrency: a question about use of cryptocurrency now appears on Form 1040.

So far, neither Treasury nor FinCEN has issued further comment about the notice, including any indication about when the timing will kick in.

The FBAR is an annual report, due on the same day as your tax return, which is normally April 15 (plus any extensions). It’s a busy year for the IRS – especially with form changes as a result of the CARES Act and the recent spending/stimulus/extenders bill – so I’m not convinced we’ll see a change that goes into effect retroactively for the tax year 2020 and reportable in 2021. But if we’ve learned anything over the past year, it’s that anything can happen. Stay tuned.

Chances are that you’ve already received notification about your second round of stimulus checks: this batch of checks is being issued much more quickly than the first round from 2020. The second round of checks is part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, signed into law by President Trump at 2020 year-end.

Since the new law took effect, I’ve been fielding emails, tweets, and messages from folks with questions about the second round of stimulus checks. As with anything tax-related, there’s a little bit of confusion. To help you sort it out, here are a few questions and answers:

General Questions

What do I need to do to get my check? You don’t have to take any action to receive your checks: this second round of payments will be distributed automatically. 

How big will my check be? Eligible individuals will receive checks of up to $600 for individuals ($1,200 for married couples) and up to $600 for each qualifying child. The amount of the checks would start to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household).

What’s a phaseout and how does it affect the amount of my check? The amount of the checks would start to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household). This is adjusted gross income (AGI), not taxable income – so before your standard or itemized deductions. You’ll see it on line 11 of your 2020 Form 1040.

How does a phaseout work? Phaseout means that the benefit goes down as income goes up. It’s a 5% drop which means that for every $100 of income above those thresholds, your check will drop by $5. So, if you are a single filer earning $75,100, your check will be $595 ($600-$5). If you are a single filer earning $85,000, your check will be $100 ($600-$500). If you do the quick math on that, it means that you’ll phaseout completely (meaning that you’ll get nothing) once you hit $87,000 as a single filer, $174,000 as a married couple filing jointly, or $124,500 for heads of household.

Does the phaseout apply to the dependent portion, too? Yes.

Eligibility

Are there limits on kids? There are no limits on the number of children that qualify. The definition of a child will be the same as for the child tax credit. There was no “dependent fix” which means that children 17 and over do not qualify as a dependent for purposes of stimulus checks.

But my child is 17 and lives with me and eats all of the food in my house. Are you saying I don’t get a check for my kid? Yes. Qualifying dependents must be under age 17 on December 31, 2019. (Don’t send me hate mail, I have kids, too. I get it. Yell at Congress.)

Wait, the child tax credit requires that the child be related to me. So, if I take care of a child who is not related to me, I can’t get a check for that child? That’s correct. The child has to be related to you, such as your son, daughter, stepchild, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, grandchild, niece, or nephew) – and meet the other criteria for dependency. Foster children also qualify.

Will I need a Social Security Number to get a check? Yes. Or in the alternative, an adoption taxpayer identification number. Ditto for spouses and kids.

What about ITINs? You need a valid SSN to get a check. However, if you are married to someone with an ITIN and you file jointly, this will not disqualify you from getting a check (your spouse will not receive a check). Additionally, if you are a married taxpayer filing jointly and at least one of you has a valid SSN, you will receive a check for your dependent (this is different from the CARES Act). But if both of you and your spouse do not have an SSN, your child will not receive a check even if your child has an SSN. Additionally, an ITIN won’t be accepted for a qualifying child.

Will seniors and retired folks get a check? Yes. Seniors and retired folks are eligible so long as they meet the other criteria (Social Security numbers, income thresholds, etc.).

What about those on government benefits? And those with no income? Yes, eligible folks include those with no income, as well as those whose income comes entirely from benefit programs like as SSI or SSDI benefits.

So I don’t have to work to get a check? No.

What if I normally work but I am unemployed? Still doesn’t matter. You don’t need to work to be eligible for a check.

My husband/wife/grandmother/neighbor died this year. Are they eligible for a check? A payment won’t be issued to someone who has died before January 1, 2020. And if you filed a joint return in 2019 and your spouse died before January 1, 2020, you won’t receive a $600 payment for your deceased spouse, but you’ll still be eligible for your check plus the amount for any qualifying children.

My husband/wife/grandmother/neighbor is in jail. Are they eligible for a check? Yes. An incarcerated individual is entitled to a check if all eligibility requirements are met. 

Will I still get the check if I owe the IRS some money? Yes.

What if my check is normally seized for child support? Yes, your second stimulus check will not be offset for any Federal or state debts. Your first stimulus check may have already been offset (the rules were different for the first round of payments under the CARES Act).

Timing and Payment

When will I get my check? Initial direct deposit payments began arriving last week. Paper checks were mailed beginning on Wednesday, December 30. Mailed payments, including those to check recipients who live abroad, will require more processing and mailing time.

How will I get my check? If you didn’t receive your earlier stimulus payment by direct deposit, you will receive a check or, in some instances, a debit card. If you don’t receive a direct deposit by early January, watch the mail for either a paper check or a debit card.

What if I changed or closed my bank account? If your account is closed, no longer active, or unfamiliar, your bank must return the payment to the IRS. If that happens, you won’t get your payment as a direct deposit: you’ll get a check.

What if I’ve moved? Under the law, the Treasury must send notice of the payment by mail to your last known address. The notice will include how the payment was made and the amount of the payment. The notice will also include a phone number for the appropriate point of contact at the Internal Revenue Service (IRS) if you didn’t receive the payment. You can help make sure that it goes to the right place by updating your address after a move. Usually, you’d do that on your tax return, but you can also submit a federal form 8822, Change of Address (downloads as a PDF). It generally takes four to six weeks to process a change of address.

Can I update my bank account or my address online? No.

Status Of Your Check

How can I check on the status of my check? Use the Get My Payment tool on irs.gov: it’s updated once a day. You can find out more here.

But the Get My Payment tool ISN’T WORKING. What now? If you get a “please wait” or error message, the IRS says that’s normal and is due to the high volumes coming in. Check back later.

When I did come back to Get My Payment later, it still was not working. Now what? There is a limit to the number of times people can access Get My Payment each day. When people reach the maximum number of accesses, Get My Payment will inform them they will need to check back the following day.

What happens if Get My Payment says “not available”? If the tool shows “Payment Status #2 – Not Available,” then you will not receive a second Economic Impact Payment and instead you need to claim the Recovery Rebate Credit on your 2020 Tax Return.

Taxes and Benefits

Is my check taxable? No. This is not taxable income.

Do I have to pay it back? No.

Will my federal benefits, like food stamps, be affected? No.

How will this affect my 2020 tax return? If you did not receive the full amount of stimulus payments that you were entitled to receive, you can fix it on your 2020 tax return (the one you’ll file this year, in 2021). There will be a worksheet on your tax return so that you can calculate what’s called the Recovery Rebate Credit. You will need to know the amounts of the first and second payments to fill out the worksheet.


This information is current as of January 6, 2021. I’ll update if and when more information is available.

The Internal Revenue Service (IRS) has announced that the “Get My Payment” tool is now open. Folks looking for information about their stimulus checks (Economic Impact Payments, or EIPs) can now check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov.

The “Get My Payment” tool will allow you to confirm that:

  • Whether the IRS has sent your second stimulus payment.
  • Whether the IRS sent your first stimulus payment. Not that some people received their first stimulus in partial payments; if you received partial payments, the tool will show only the most recent.
  • Whether to expect your stimulus payment by direct deposit or mail.

According to the IRS, data is updated once per day overnight, so there’s no need to check more than once per day.

The IRS advises folks to use the tool to check on the status of their stimulus payment, but not to call. The IRS phone assistors do not have additional information beyond what’s available on IRS.gov and in the Get My Payment tool. 

This second round of checks is part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, passed by Congress last week and signed into law by President Trump on Sunday night.

What If You Have Trouble With The Tool?

To use the Get My Payment tool, you must first verify your identity by answering security questions. If the information you enter does not match IRS records, you will receive an error message. To avoid this:

  • Double-check the information requested;
  • Make sure what you enter is accurate;
  • Try entering your street address in a different way (for example: 123 N Main St instead of 123 North Main St.); and
  • Use the US Postal Service’s ZIP Lookup tool to look up the standard version of your address, and enter it into exactly as it appears on file with the Postal Service.

If your answers do not match the IRS records three times, you’ll be locked out of Get My Payment for security reasons. If that happens, you must wait 24 hours and try again. If you can’t verify your identity, you won’t be able to use Get My Payment. Unfortunately, there’s no fix for that: the IRS says not to not contact them.

However, if you verified your identity and received “Payment Status Not Available,” this means that the IRS cannot determine your eligibility for a payment right now. There are several reasons this could happen, including:

  • You didn’t file either a 2018 or 2019 tax return; or
  • Your recently filed return has not been fully processed.

Again, the IRS says there’s no fix for that and you should not contact them.

Timing Of Checks

As noted earlier, initial direct deposit payments began arriving last week. Paper checks were mailed beginning on Wednesday, December 30.

Direct deposit payments may take several days to post to individual accounts. Some folks may have seen the payments as pending or as provisional payments in accounts before the scheduled payment date of January 4, 2021, which was the official date that funds were available.

If you didn’t receive your earlier stimulus payment by direct deposit, you will likely receive a check or, in some instances, a debit card. If you don’t receive a direct deposit by early January, watch the mail for either a paper check or a debit card. Mailed payments will require more processing and mailing time.

Eligible check recipients who live abroad will have longer wait times for checks as disruptions to air travel and mail delivery in some countries will slow delivery.

Forms Of Payment

The form of payment for the second stimulus check may be different than for the first stimulus check. Some people who received a paper check last time might receive a debit card this time, and some people who received a debit card last time may receive a paper check.

Please watch the mail carefully! Last time, some taxpayers weren’t expecting those debit cards and accidentally tossed them in the trash. If Treasury sends you a debit card, it will be issued by Treasury’s financial agent, MetaBank®, N.A. The card will be sent in a white envelope with the U.S. Department of the Treasury seal. The card has the Visa name on the front of the Card and the issuing bank, MetaBank®, N.A. on the back of the card. More information about these cards is available at EIPcard.com.

Automatic Payment

If you’re eligible to receive this second payment, you don’t need to do anything to receive a stimulus check.

Payments will be automatic for eligible taxpayers who filed a 2019 tax return, those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits as well as Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who didn’t file a tax return. (If you’re in this group and you don’t receive a payment for any reason, you can claim your payment when you file a 2020 tax return.)

Payments will also be automatic for anyone who successfully registered for the first payment online at IRS.gov using the agency’s Non-Filers tool by November 21, 2020, or who submitted a simplified tax return that has been processed by the IRS.

Who Is Eligible For A Payment?

Eligible individuals will receive checks of up to $600 for individuals ($1200 for married couples) and up to $600 for each qualifying child. The amount of the checks would start to phaseout for those earning more than $75,000 ($150,000 for joint returns and $112,500 for heads of household).

As before, dependents who are 17 and older are not eligible for the child payment. This is important to understand because there had been some discussions about changing the eligibility for dependents: that did not happen.

You can find out more about phaseouts and eligibility here. Additional information is also available on the Internal Revenue Service (IRS) website at IRS.gov/EIP.

Will You Get Anything With Your Payment?

As before, you’ll receive an IRS notice, or letter, after you receive a payment showing the amount of the payment. Keep this for your tax records.

What If You Have Changed Your Address Or Bank Account?

The IRS will use the data already in its systems to send the new payments:

  • If your direct deposit information is on file, you will receive the payment that way.
  • If your direct deposit information is not on file, you will receive the payment as a check or debit card in the mail.

Some payments may have been sent to an account that may be closed or no longer active. By law, the financial institution must return the payment to the IRS, they cannot hold and issue the payment to an individual when the account is no longer active.

The IRS cannot change payment information, including bank account or mailing information. If an eligible taxpayer does not get a payment or it is less than expected, it may be claimed on the 2020 tax return as the Recovery Rebate Credit. Remember, Economic Impact Payments are an advance payment of what will be called the Recovery Rebate Credit on the 2020 Form 1040 or Form 1040-SR.

What If You’re A Non-Filer and Didn’t Register With IRS.gov?

If you’re eligible for a stimulus payment but DO NOT generally file a tax return and you DID NOT register with the using the Non-Filer tool, you won’t receive an automatic payment. You can still claim your payment when you file your 2020 federal income tax return.

What If You Didn’t Receive Your First Stimulus Check?

If you are an eligible individual and you did not receive a stimulus check earlier this year, you will be able to claim it when you file your 2020 taxes in 2021. This is also true if you do not receive your second stimulus check.

If you didn’t receive a check, the IRS urges you to review the eligibility criteria when you file your 2020 taxes; many people, including recent college graduates, may be eligible to claim it. The stimulus checks will be referred to as the Recovery Rebate Credit (RRC) on Form 1040 or Form 1040-SR. You can read more about the Form 1040 for 2020 – including where the RRC can be found – here.

What If Congress Approves Bigger Stimulus Checks?

As for those ongoing discussions to boost the check totals to $2,000 per person? If additional legislation is passed, EIPs that have been issued will be topped up as quickly as possible.

Looking for your tax forms? Keep checking the mail: Employers are supposed to provide employees with Forms W-2 and other wage statements by February 1 in 2021.

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that was enacted on December 18, 2015, made several changes to the way we file taxes. Now, employers file copies of Form W-2, Wage and Tax Statements, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. That is also the date that Forms W-2 are due to employees.

However, this year (2021), January 31 falls on a Sunday. By law, that means that forms W-2 are instead due on the next business day, which is Monday, February 1.

In addition, some Forms 1099-MISC, Miscellaneous Income, and the newly re-introduced Form 1099-NEC, Nonemployee Compensation (more on that here), are also normally due to taxpayers on January 31, but in 2021, they will be due on the next business day, February 1, 2021.

Here’s a look at some other form due dates:

These are accurate so far as I know and as of today. If you’re not sure about a due date, check the form instructions.

The IRS Hasn’t Announced The Start Of Tax Season

I know you’re anxious to get started on your returns, but just because you may have your tax form in hand doesn’t mean that you can file. The Internal Revenue Service (IRS) has not yet announced when tax season will open, meaning when it will accepting paper and electronic tax returns. Last year, the IRS announced on January 6, 2020, that tax season would open on January 27, 2020. I expect a similar announcement any day now.

What Happens If You Don’t Receive Your Form On Time?

  • Some forms might have been issued earlier, so go back through your records if you’re missing a 1099 or a 1098-C. If you redeemed savings bonds, for example, the form 1099-INT might have been issued at the time of redemption. Similarly, if you donated a car to charity, form 1098-C would have been acknowledged within 30 days of the sale or 30 days of the contribution.
  • It’s popular to make some forms available online or via email. However, tax forms cannot be generated electronically without your consent unless a paper copy is also issued. However, in these days of e-statements and online transfers, it’s not out of the question that you might have checked a box to receive your information electronically. Check your inbox and your spam filter.
  • You may also want to hold off filing if you’re a beneficiary of a trust or estate, or a shareholder, partner or member of a pass-through company. Even though those entities now file a little earlier with the IRS than they used to, they rarely report early. Pass-through entities must prepare their tax returns before they can furnish Schedules K-1. Those Schedules K-1 might take until March or April to show up on your doorstep. In some cases, it could take longer.

If you haven’t received a tax form by the due date, here’s what to do:

  • Look around. Your form could be stuck in a magazine or lost in that pile of mail on the counter that you’ve been swearing to sort through for weeks. Your form could be at work. Before you assume that it wasn’t delivered, double-check.
  • If you’re sure that you didn’t receive your forms, contact the issuer. It might be easy to fix. You might not have received the form because of an incomplete or wrong address. Or maybe your form got lost in the mail. If that’s the case, the issuer can furnish another form: problem solved.
  • If your employer is no longer in business or has moved, try to make contact. It’s the fastest, easiest solution. If you don’t receive your forms and you don’t know where your employer has moved, send a note to the last known address; there may be a forwarding order at the post office. Or try Google. I know that it’s not your job to find your employer, but if you have time to click through Schitt’s Creek memes, you can search online for a change of address (and if you are clicking through Schitt’s Creek memes, feel free to pass those along to me!).
  • If you still don’t have your forms, or if your forms aren’t correct, contact IRS. The IRS doesn’t want to hear from you about missing forms until the end of February. But when you call, have your address, phone number, Social Security Number, and dates of employment available. It’s also helpful to have an estimate of your earnings, together with your withholding; you can find most of this information on your last pay stub. You’ll also need the name, address, and phone number of your employer. Make your life easier by being prepared before you pick up the phone.
  • Be patient. After your call, the IRS will contact your employer. The IRS will also send you a form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., along with instructions. If you don’t receive your missing forms from your employer by Tax Day, April 15, file form 4852. But be smart: don’t file to get your tax return in early or to teach an employer a lesson. If you file an improper form, you could be hit with substantial penalties.
  • You may need to amend. If you receive your tax form after your return is filed using a form 4852, and the information is different from what you reported, you will have to amend your return via form 1040X, Amended U.S. Individual Income Tax Return (downloads as a PDF).
  • If you need to replace a form SSA-1099 or SSA-1042, you can request a new one on or after February 1, 2020. The easiest way is to go online and request an instant, printable replacement form at www.socialsecurity.gov/myaccount. If that’s not an option, you’ll need to contact SSA directly, not IRS. To contact SSA, you can call 1.800.772.1213 (TTY 1.800.325.0778) or visit your local Social Security Office (find yours here).

One final piece of advice: do not file your tax returns until you’ve received your tax forms. I know it’s tempting. I know you think you know what’s on those forms, but what if you’re wrong? Not only are you making it hard on your preparer to figure it out, but you’re also asking them to break the rules: the IRS bars tax preparers from e-filing tax returns with pay stubs (without receipt of forms W-2, W-2G and 1099-R). There are whole threads on social media about tax pros who feel victimized by taxpayers insisting that they file early: don’t be that guy (or girl).

Filing before you have your forms in hand also sets you up for a potential audit. For starters, the IRS matches forms W-2 and forms 1099 to the information on your tax return. If the data doesn’t match, the IRS will flag your return. My mom – who is right almost all of the time about everything – used to tell me that it was okay to be different. That might be true in junior high, but it’s not true at the IRS. Trust me. You want your tax return to look like everybody else’s tax return. Don’t give the IRS a reason to give yours a second look.

Estimated reading time: 6 minutes

I’ve been asked a lot recently about section 230 – a phrase that’s been tossed around a lot with respect to stimulus checks.

Section 230 isn’t a tax provision (in fact, there isn’t even a section 230 in the Tax Code): it’s actually a telecommunications law. And I’m not a tech or intellectual property lawyer: my focus is tax. But in the spirit of trying to explain what section 230 has to do with stimulus checks – which are tax-related – I’m going to give you a quick summary. If you need a deeper dive, there’s some good stuff out there from tech lawyers.

What is Section 230?

Section 230 is part of a law – the Communications Decency Act (CDA of 1996) – which was passed in 1996. It provides liability protection for social media companies like Twitter and Facebook with respect to content posted by their users.

The meaty part is here:

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

47 U.S. Code § 230

And you can find the full text of the law here.

What the law does, basically, is say that you can’t hold these companies – and other intermediaries like Internet Service Providers (ISPs) – legally responsible for things that other people post. There are some exceptions including conduct that is criminal, as well as copyright and other intellectual property, but the idea is that you – not the platform – should be responsible for your conduct, not Twitter or Facebook. Without section 230, companies might be so scared of being sued that they would either have to monitor everything posted all of the time – or they might just throw in the towel and decide not to provide the service at all.

Why Does Section 230 Exist?

The history of the bill dates backs to a 1995 court ruling against the online service, Prodigy. Prodigy isn’t around anymore, but back in the day, it was a top online service platform, along with CompuServe – another blast from the past. In 1994, an anonymous user created a post accusing Stratton Oakmont (a securities firm founded by Danny Porush, Brian Blake, and Jordan Belfort – if that last name rings a bell, you’ve likely seen Wolf Of Wall Street) of fraud. Stratton Oakmont sued the anonymous user and Prodigy for defamation. They won, with the court holding that since Prodigy did some moderation, it should be treated as a publisher. The case was Stratton Oakmont, Inc. v. Prodigy Services Co., (N.Y. Sup. Ct. 1995).

(Fun fact: In 1996, Stratton Oakmont shut down – for fraud – after it was expelled from the National Association of Securities Dealers (NASD) because it posed “an ongoing risk to the investing public.” A few years later, Porush and Belfort went to prison on securities fraud and money laundering charges.)

In 1996, section 230 was signed into law to rebut the presumption under Stratton Oakmont that companies should be treated as a publisher under the law. Now, if tech companies moderate some material – like keeping adult content away from children – they are protected from liability for other user content. In other words, if Facebook takes down sexually explicit content, I can’t use that as a justification to sue Facebook because my brother called me a name online. And, in the same vein, a restaurant can’t sue Facebook because it got a bad review from a customer.

Not everyone is a fan of section 230, including the President.

Why Does The President Want To Repeal Section 230?

In May of 2020, Twitter fact-checked some of the President’s tweets related to voting by mail. That resulted in a war of words with the President. On May 28, 2020, President Trump issued an Executive Order, targeted at tech companies, including Twitter, stating that, “Twitter now selectively decides to place a warning label on certain tweets in a manner that clearly reflects political bias.” He called for legislation to fix what he saw as a problem, specifically calling for a repeal of section 230, but Congress did not act.

The Stimulus/Spending/Extenders Bill

So what does this have to do with taxes? Remember the stimulus/spending/extenders bill? That bill passed the House and Senate and landed on the President’s desk, where he signed it – but only after pausing a few days to insist on some changes, including higher stimulus checks ($2,000 per person) and elimination of what he deemed wasteful spending.

When the President signed the bill into law, he said he was doing so with the understanding that the Senate would consider three things:

The Senate will start the process for a vote that increases checks to $2,000, repeals Section 230, and starts an investigation into voter fraud.

President Trump statement, December 27, 2020

He specifically signaled for the repeal of section 230 after signing the bill into law – even though there’s no mention of section 230 in the stimulus/spending/extenders bill.

What About The NDAA And That Veto?

When the bill went back to Congress, Senate Majority Leader Mitch McConnell (R-KY) urged his colleagues to overturn the veto, saying, “For the brave men and women of the United States armed forces, failure is not an option. So when it is our turn in Congress to have their backs, failure is not an option here either. I urge my colleagues to support this legislation one more time.” The veto was quickly overridden with a House vote of 322-87 and a Senate vote of 81-13 on January 1, 2021.

McConnell Ties Checks To Section 230

However, a few days before the veto override vote, on December 29, 2020, Sen. McConnell had acted on section 230. He introduced a bill that would have done what the President asked: tie the increase in stimulus checks to $2,000 to the repeal of section 230. It was a combined, not a stand-alone, bill. McConnell’s bill would have also required a bipartisan commission to study the “integrity and administration” of the 2020 election.

You can read the text here. It was not seriously considered.

We Have A New Congress

So what comes next?

The new Congress – the 117th – has already been sworn in. Under the Constitution:

The Congress shall assemble at least once in every year, and such meeting shall begin at noon on the 3d day of January, unless they shall by law appoint a different day.

20th Amendment, section 2

That happened on schedule this year.

Any changes to existing laws, including a repeal of section 230 or increases to stimulus checks, must be taken up by the new Congress. Stay tuned.

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