On December 27 the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed into law. There are many changes in its 5,593 pages, but none is more talked about than the new stimulus payment. Late on December 29, the IRS announced it had started issuing payments to taxpayers who received the first round of payments earlier this year. The IRS stated that initial direct deposit payments would begin arriving as early as the night of December 29 and will continue into next week. Paper checks will begin to be mailed on December 30.

The IRS emphasizes that no action is required by eligible taxpayers to receive the second stimulus. Payments are automatic for eligible taxpayers who filed a 2019 tax return, and for those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who did not file a tax return. Payments are also automatic for anyone who successfully registered for the first payment online at using the agency’s Non-Filers tool by Nov. 21, 2020 or who submitted a simplified tax return that has been processed by the IRS.

Most taxpayers will receive the payment as a direct deposit. It is possible these direct deposits will show in a bank account as pending or provisional payments because the official payment date is January 4, 2021.  Social Security recipients who received the first stimulus payment via Direct Express will receive the new payment in the same way. The IRS has announced that if a direct deposit is not received by early January taxpayer are to look out for  either a paper check or a debit card. The IRS has further stated that the form of payment for the second mailed stimulus payment may be different than for the first. 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.

There is one main difference regarding the eligibility requirements. Under the earlier CARES Act, joint returns of couples where only one member of the couple had a Social Security number were generally ineligible for a payment, unless they were a member of the military. The new law provides that these families will now be eligible to receive payments for the taxpayers and qualifying children of the family who have work-eligible social security numbers. People in this group who do not receive an Economic Impact Payment can claim this when they file their 2020 taxes under the Recovery Rebate Credit.

There were many other tax changes and extensions in the new Act. Below is a brief description of the changes that apply to most taxpayers.

  • Business meals incurred after December 31, 2020 and before January 1, 2023 are fully deductible. The food and beverage must have been provided by a restaurant. These expenses are currently limited to 50%.
  • Beginning in 2021 taxpayers who do not itemize deductions may claim a charitable contribution deduction of $300 ($600 if filing jointly). This clears up the confusion which arose under the CARES Act regarding the amount of the deduction for those filing jointly.
  • The accuracy related penalty (negligence) is increased from 20% to 50% for those who overstate the charitable deduction. This applies to tax years beginning after December 31, 2020.
  • The charitable deduction limitations changes made by the CARES Act have been extended to 2021.
  • The floor for the medical expense deduction for those who itemize has been decreased from 10% to 7.5% for tax years beginning after December 31, 2020.
  • The income limitation for the phaseout of the Lifetime Learning Credit and the American Opportunity Credit has been increased for tax years beginning after December 31, 2020.
  • The deduction for qualified tuition and related expenses is repealed for tax years beginning after December 31, 2020.
  • The work opportunity credit has been extended to 2025.
  • The exclusion from income for discharge of indebtedness on the sale of qualified principal residence has been extended to 2025, but the amount that can be excluded has been reduced.
  • The employer credit for paid family and medical leave has been extended to 2025.
  • The exclusion for certain employer payments of student loans has been extended to 2025.
  • The mortgage insurance premium deduction on a qualified residence has been extended to December 31, 2021.
  • The employer retention credit under the CARES Act has been extended to July 1, 2021, but it has also been modified.
  • Temporary special rules for health and dependent care flexible spending have been enacted and are applicable through 2021.
  • No early distribution penalty for limited amount of qualified disaster distributions from a retirement plan will be imposed. There is also an employee retention credit for employers affected by a qualified disaster.


On a happier note, and having nothing to do with COVID-19, the United States now has a new national park! The New River Gorge National Park and Preserve in West Virginia. Additionally, a mountain in Elk Ridge City, Utah has been named “Miracle Mountain”.



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