The Treasury Department and the IRS are issuing millions of second Economic Impact Payments by prepaid debit card to speed delivery of the payments to as many people as possible.
If the Get My Payment tool on IRS.gov shows a date that a recipient’s payment was mailed, they should watch their mail for either a paper check or debit card. The debit cards arrive in a white envelope that prominently displays the U.S. Department of the Treasury seal.
The prepaid debit card, called the Economic Impact Payment card, is issued by Treasury’s financial agent, MetaBank®, N.A. The IRS does not determine who receives a card.
The form of payment for the second mailed EIP may be different than the first mailed EIP. Some people who received a paper check last time might receive a prepaid debit card this time, and some people who received a prepaid debit card last time may receive a paper check.
EIP Cards are safe, convenient and secure
These cards provide certain protections against fraud, loss and other errors. They can be used to make purchases online or in stores anywhere Visa® Debit Cards are accepted.
Cardholders can also use the cards to do any of the following without paying a fee:
- Transfer funds to a personal bank account
- Make signature or PIN-debit purchases anywhere Visa Debit
- Cards are accepted — in stores, online or over the phone
- Get cash back with a PIN debit purchase where available
- Get cash from in-network ATMs
- Get a replacement EIP Card, if needed
- Check their card balance online, through a mobile app or by phone
People should watch their mail carefully
EIP Cards are being sent in a white envelope that prominently displays the U.S. Department of the Treasury seal. The envelope also states “Not a bill or an advertisement. Important information about your Economic Impact Payment.” The EIP Card has the Visa name on the front of the card and the issuing bank name, MetaBank®, N.A. on the back. Each mailing will include instructions on how to securely activate and use the EIP Card. These cards are being issued to eligible recipients across all 50 states and the District of Columbia. Residents of the western United States are generally more likely to receive an EIP Card.
People can check the status of their payment using the Get My Payment tool on IRS.gov.
When you get ready to file your federal tax return there are new things to consider when it comes to which credits to claim and what deductions to take. These things can affect the size of any refund you may receive.
Here are some new key things you should consider when filing your 2020 tax return.
Recovery rebate credit
You may be able to claim the recovery rebate credit if you met the eligibility requirements in 2020 and one of the following applies to you:
• You didn’t receive an Economic Impact Payment in 2020.
• You are single and your payment was less than $1,200.
• You are married, filed jointly for 2018 or 2019 and your payment was less than $2,400.
• You didn’t receive $500 for each qualifying child.
Refund interest payment
People who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income, to anyone who received interest of at least $10.
New charitable deduction allowance
New this year, taxpayers who don’t itemize deductions can take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For more information, you should review Publication 526, Charitable Contributions.
Other refund-related reminders
• Taxpayers shouldn’t rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some tax returns may require additional review and processing may take longer.
• Refunds for taxpayers claiming the earned income tax credit or additional child tax credit can’t be issued before mid-February. This applies to the entire refund, not just the portion associated with this credit.
• Taxpayers can track the status of their refund using the Where’s My Refund? tool.
Following tax law changes, cash donations of up to $300 made this year by December 31, 2020 are now deductible without having to itemize when people file their taxes in 2021.
The Coronavirus Aid, Relief and Economic Security Act includes several temporary tax law changes to help charities. This includes the special $300 deduction designed especially for people who choose to take the standard deduction, rather than itemizing their deductions.
This change allows individual taxpayers to claim a deduction of up to $300 for cash donations made to charity during 2020. This deduction lowers both adjusted gross income and taxable income – translating into tax savings for those making donations to qualifying tax-exempt organizations.
Before making a donation, taxpayers should check the Tax Exempt Organization Search tool on IRS.gov to make sure the organization is eligible for tax deductible donations.
Cash donations include those made by check, credit card or debit card. They don’t include securities, household items or other property. Though cash contributions to most charitable organizations qualify, some don’t. People should review Publication 526, Charitable Contributions for details. Cash contributions made to supporting organizations are not tax deductible.
The CARES Act includes other temporary allowances designed to help charities. These include higher charitable contribution limits for corporations, individuals who itemize their deductions and businesses that give food inventory to food banks and other eligible charities. For more information, visit the Coronavirus Tax Relief page of IRS.gov.
By law, recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes getting a receipt or acknowledgement letter from the charity before filing a return and retaining a cancelled check or credit card receipt.
In January, the IRS Identity Protection PIN Opt-In Program will be expanded to all taxpayers who can properly verify their identity.
An identity pretention PIN is a six-digit number assigned to eligible taxpayers to help prevent their Social Security number from being used to file fraudulent federal income tax returns. This number helps the IRS verify a taxpayer’s identity and accept their tax return. The online Get An IP PIN tool immediately displays the taxpayer’s assigned number.
This tool uses Secure Access authentication verify a person’s identity. Taxpayers should review the Secure Access requirements before they try to use the Get An IP PIN tool.
Other ways to get an IP PIN
There are other ways to get an IP PIN if someone is unable to pass the Secure Access authentication. Taxpayers with income of $72,000 or less should complete Form 15227 and mail or fax it to the IRS. An IRS employee will call the taxpayer to verify their identity using a series of questions. Those who pass authentication will receive an IP PIN the following tax year.
Taxpayers who cannot verify their identities remotely or who are ineligible to file Form 15277 should make an appointment, visit a Taxpayer Assistance Center and bring two forms of picture identification. This is an in-person identity verification. After the taxpayer passes authentication, an IP PIN will be mailed to them within three weeks.
Taxpayers should never share their IP PIN with anyone but their tax provider. The IRS will never call to request the taxpayer’s IP PIN, and taxpayers must be alert to potential IP PIN scams.
Here’s what taxpayers need to know before applying:
- The Get an IP PIN tool will be available in mid-January.
- This is the preferred method of obtaining an IP PIN and the only one that immediately reveals the PIN to the taxpayer.
- Taxpayers who want to voluntarily opt into the IP PIN program don’t need to file a Form 14039, Identity Theft Affidavit.
- The number is valid for one year. Each January, the taxpayer must get a new one.
- It must be entered correctly on electronic and paper tax returns to avoid rejections and delays.
- Taxpayers with either a Social Security Number or Individual Tax Identification Number who can verify their identity are eligible for the program.
- Any primary or secondary taxpayer or dependent can get an IP PIN, if they can prove their identity.
- The IRS plans to offer an opt out feature to the IP PIN program in 2022.
Confirmed victims of tax-related identity theft
There is no change in the IP PIN Program for confirmed victims of tax-related identity theft. These taxpayers should still file a Form 14039 if their e-filed tax return rejects because of a duplicate SSN filing. The IRS will investigate their case and once the fraudulent tax return is removed from their account, they will automatically receive an IP PIN by mail at the start of the next calendar year.
IP PINs will be mailed annually to confirmed victims and participants enrolled before 2019. For security reasons, confirmed identity theft victims can’t opt out of the IP PIN program. Confirmed victims also can use the Get an IP PIN tool to retrieve lost IP PINs assigned to them.
There are steps you can take now to make sure your tax filing experience goes smoothly in 2021. First, they can visit the Get Ready page on IRS.gov.
Here are a few other things you can do now:
Check your withholding and make any adjustments soon
Since most taxpayers typically only have a few pay dates left this year, checking your withholding soon is especially important. It’s even more important if you:
• Received a smaller refund than expected after filing your 2019 taxes this year.
• Owed an unexpected tax bill last year.
• Experienced personal or financial changes that might change your tax liability.
You may owe an unexpected tax bill when you file your 2020 tax return next year, if you didn’t have enough withheld throughout the year. To avoid this kind of surprise, you should use the Tax Withholding Estimator to perform a quick paycheck or pension income checkup. Doing so helps you decide if you need to adjust your withholding or make estimated or additional tax payments now.
Gather tax documents and keep them for at least three years
Everyone should come up with a recordkeeping system. Whether it’s electronic or paper, you should use a system to keep all important information in one place. Having all needed documents on hand before you prepare your return helps you file a complete and accurate tax return. This includes:
• Your 2019 tax return.
• Form W-2 from employers.
• Form 1099 from banks and other payers.
• Forms 1095-A from the marketplace for those claiming the premium tax credit.
• Form 1099-NEC, Nonemployee Compensation
• Notice 1444, Your Economic Impact Payment.
Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and virtual currencies. Therefore, you should also gather any documents from these types of earnings. You should keep copies of tax returns and all supporting documents for at least three years.
Confirm mailing and email addresses
To make sure forms make it to you on time, you should confirm now that each employer, bank and other payer has your current mailing address or email address. Typically, forms start arriving by mail or are available online in January.
Remember these new things when preparing for the 2021 tax filing season
• Taxpayers may be able to claim the recovery rebate credit if you met the eligibility requirements in 2020 and one of the following applies to you:
– You didn’t receive an Economic Impact Payment in 2020.
– You are single and your payment was less than $1,200.
– You are married, filed jointly for 2018 or 2019 and your payment was less than $2,400.
– You didn’t receive $500 for each qualifying child.
• Taxpayers who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income to anyone who received interest totaling at least $10.
Whether you are supporting natural disaster recovery, COVID-19 pandemic aid or another cause that’s personally meaningful to you, your charitable donations may be tax deductible. These deductions basically reduce the amount of your taxable income.
Here’s how the CARES Act changes deducting charitable contributions made in 2020:
Previously, charitable contributions could only be deducted if you itemized your deductions.
Now, those who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose. The law changed in this area due to the Coronavirus Aid, Relief, and Economic Security Act.
The CARES Act also suspends limits on charitable contributions and temporarily increases limits on contributions of food inventory.
Here are some resources for anyone making donations:
Tax Exempt Organization Search
You must give to qualified organizations to deduct your donations on your tax return. Use this tool to find out if a specific charity qualifies as a charitable organization for income tax purposes.
Publication 526, Charitable Contributions
This publication explains how you claim a deduction for charitable contributions. It goes over:
- How much you can deduct.
- What records you must keep.
- How to report contributions.
Publication 561, Determining the Value of Donated Property
You generally can deduct the fair market value of property you donate. This publication helps determine the value of donated property.
Form 8283, Noncash Charitable Contributions
You must file Form 8283 to report noncash charitable contributions if the amount of this deduction is more than $500. The instructions for this form walk you through how to complete it.
Schedule A, Itemized Deductions
Anyone deducting donations must do so on Schedule A. The instructions for this form include line-by-line directions for completing it.
Frequently asked questions: Qualified charitable distributions
If you are age 70 ½ or older you can make a qualified charitable distribution from your IRA – up to $100,000 – directly to an eligible charity. It’s generally a nontaxable distribution made by the IRA trustee to a charitable organization. A QCD counts toward your minimum distribution requirement for the year.