Finance

8 Ways the Second Stimulus Check Is Different From the First

Late on Dec. 29, the IRS announced that the second stimulus checks were already on their way. Compared to the first coronavirus check, they’re a lot leaner, but they’re also going out faster. In some cases, you may qualify for one payment and not the other. Here are eight key differences to know.

8 Differences Between the First vs. Second Stimulus Check

First, a few things that haven’t changed: You don’t need to take action to get your check. You don’t have to worry about owing taxes on your stimulus payment. And anyone who’s eligible for either payment who doesn’t (or didn’t) get it will still be able to claim their money by filing a 2020 tax return.

OK, now let’s break down the differences.

1. The payments are smaller.

This one’s glaringly obvious: Instead of the $1,200 payments most adults received mid-2020, the second stimulus check is just $600. Although President Trump has pushed for a $2,000 check and the Democrat-led House of Representatives passed a bill increasing the checks to $2,000, Senate Majority Leader Mitch McConnell blocked a vote on the measure. As of Dec. 30, 2020, the only checks that have been approved are for $600, but the IRS says it will top off any payments already made if a higher amount is approved.

2. You get $100 more for dependent kids 16 and younger.

In the first round, the child coronavirus tax credits were $500. This time, parents will receive $600 for dependent children 16 and younger, the same amount adults get. In the first round, a married couple with two kids under age 17 would have received $3,400. Now the same family will get $2,400.

Anyone 17 or older who’s claimed as a dependent on someone else’s tax return still won’t qualify for a payment this round. That means many college students and disabled people will be left out again.

3. The income phaseouts are lower.

For both the first and second stimulus check, payments phase out at a rate of 5 cents for every $1 you earn above these thresholds:

  • $75,000 if you’re single
  • $112,500 if you’re head of household
  • $150,000 if you’re married and file a joint tax return.

Because the payments are lower this time, the payments will be phased out at lower income levels compared to the first time. For example, the first round didn’t completely phase out for someone single until their income reached $99,000. This time, that same person wouldn’t get a check if they earned more than $87,000.

4. Only your 2019 tax returns are considered.

Payments will be based on your 2019 tax return only for the second stimulus check. For the first check, the IRS used your 2019 return if it was available. But it used 2018 returns for some people who hadn’t yet filed because the tax deadline was extended or their returns hadn’t been processed yet.

If you get Social Security, SSI, SSDI, Railroad Retirement System or VA Benefits, the IRS will get the information it needs to make your payment, just as it did last time. If you used the non-filer tool, the IRS also has the information it needs to get you your check.

One thing that gets tricky, though, is that both checks are an advance on a special 2020 tax credit. You won’t owe taxes on your stimulus checks, and you won’t have to repay them even if you didn’t qualify based on your 2020 income. But if your 2020 return qualifies you for stimulus money because your income fell or you had a child, you can get your stimulus money as a rebate recovery credit when you file your 2020 tax return.

5. People who owe child support will get checks.

People who owe child support will get a $600 stimulus check. The first stimulus check excluded people whose tax refunds are seized through the Treasury Offset program due to unpaid child support.

6. You can get a check if your spouse doesn’t have a Social Security number.

If you’re married and file a joint return with someone who doesn’t have a Social Security number, you’ll qualify for a $600 payment. You’ll also receive a payment for dependent children 16 and younger. Mixed-status families weren’t allowed to claim payments under the CARES Act, but the new relief bill also allows them to retroactively apply for payments from the first round for anyone in the household who has a Social Security number.

7. You could get this one faster.

The IRS started sending out the second stimulus check to people with direct deposit on Dec. 29, just two days after President Trump signed the relief bill into law. Paper checks were set to start going out Wednesday, Dec. 30. By comparison, the first round of payments didn’t start arriving until just over two weeks after the CARES Act became law.

8. The IRS has a tighter deadline.

The initial IRS timeline for the first round of payments stretched all the way into September for the highest-earning paper check recipients, though the overwhelming majority of people got them much sooner. But this time around, the IRS deadline for making payments is Jan. 15, 2021. If you haven’t gotten your payment at that point, you’ll still get one, but you’ll need to file a 2020 tax return and apply for a recovery rebate credit.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected].


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