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Most Stimulus Payments Reach Household Bank Accounts

Most Stimulus Payments Reach Household Bank Accounts

The Internal Revenue Service is required to make the payments by Jan. 15. After that, people who don’t receive payments can claim them on their

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The Internal Revenue Service is required to make the payments by Jan. 15. After that, people who don’t receive payments can claim them on their 2020 tax returns.

Photo: Gabriella Demczuk for The Wall Street Journal

WASHINGTON—The U.S. Treasury Department has sent out more than $112 billion in stimulus payments electronically, meaning that about two-thirds of the second round of payments approved by Congress is already in households’ bank accounts, according to data released Tuesday.

The payments—$600 per adult and $600 per child—were estimated to cost about $164 billion in all. They are part of a broader relief law last month that also includes unemployment insurance and money for small businesses.

The pace of payments is faster than in the spring, when the government made the first round of payments of $1,200 per adult and $500 per child. Then, about half the payments reached bank accounts within two weeks. Now, more than two-thirds of the money has gone out within about one week after President Trump signed the law passed by Congress.

In addition to the $112 billion in electronic payments, the government is also mailing checks and prepaid debit cards. It hasn’t said how many payments have been made.

“While the IRS has been able to deliver the second round of Economic Impact Payments in record time, we understand there are many questions and we appreciate everyone’s patience during this period,” the agency said in a statement late Tuesday.

The speed of the payments stems in part from the work the government did to get bank account information from several groups of people during 2020: those who don’t typically file tax returns, Social Security recipients and beneficiaries of other federal programs. That gave the government a longer list of up-to-date bank account information than it had in March and April.

Senate Majority Leader Mitch McConnell said the Senate would look to address President Trump’s call to increase stimulus checks from $600 to $2,000, a move supported by House Democrats. Senate Minority Leader Chuck Schumer moved to pass the House bill by unanimous consent, but Mr. McConnell blocked it. Photo: Michael Reynolds/EPA/Shutterstock

There are bound to be hitches, however. Some households changed bank accounts since the spring. Others never got the first payments or the full amounts. Others may see money go to their former spouses.

In some cases, the second payment is going to different accounts from the first payments, according to H&R Block Inc., the tax-preparation company.

When payments go to closed or inactive accounts, the money is sent back to the Internal Revenue Service. The IRS said it is unable to reissue and mail checks in those instances.

If that happens or if people want to check the status of their payment, they can use the “Get My Payment” feature on the IRS website. The “Payment Status #2—Not Available” message generally means that a second payment isn’t coming to that person and should be claimed on the 2020 tax return instead.

The current payments are generally based on 2019 income and begin shrinking once individual adjusted gross income reaches $75,000 or the income of a married couple hits $150,000. They are not taxable.

Some people may ultimately qualify for more than the payments they are getting now if they use their 2020 income and household size. For example, someone whose income declined from $100,000 to $50,000 in 2020 may not get a payment now but can claim it on their 2020 tax return. The same is true for someone who had a baby in 2020.

The IRS is required to make the payments by Jan. 15. After that, people who don’t receive payments can claim them on their 2020 tax returns, and some people who don’t typically file income-tax returns will have an incentive to do so.

The government’s use of the Federal Reserve’s payment system meant that the money was in transit over the holiday weekend instead of being in people’s accounts, said Aaron Klein, a former Obama administration Treasury official who is now at the Brookings Institution.

As a result, many people who really needed the money probably racked up overdraft fees from their banks. Other countries do it faster, and Americans shouldn’t accept the flaws in the current system, he said.

“Amazon can deliver anything to your doorstep faster than Uncle Sam can give you $600,” Mr. Klein said.

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Write to Richard Rubin at [email protected] and Laura Saunders at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 6, 2021, print edition as ‘Most Stimulus Payments Made.’

This post first appeared on wsj.com

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