Congressional Research Service IN11576.3 (COVID-19 and Direct Payments to Individuals: Comparison of the Second Round of “Stimulus Checks” in P.L. 116-260 to the First Round in the CARES Act (P.L. 116-136))

Summary

A Congressional Research Service Insight, IN11576 (version 3), updated January 22, 2021, comparing the second round of direct payments in the Consolidated Appropriations Act, 2021 (P.L. 116-260) with the first round in the CARES Act (P.L. 116-136), enacted in March 2020. It states that the second-round payments equal $600 per eligible individual ($1,200 for most married couples) plus $600 per eligible child, phasing down for higher-income households, and are structured as a one-time refundable credit against 2020 income taxes. It explains that Treasury is issuing them automatically based on 2019 tax data until January 15, 2021, and that households who do not receive the full amount can claim it on their 2020 income tax return.

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INSIGHTi

COVID-19 and Direct Payments to
Individuals: Comparison of the Second
Round of “Stimulus Checks” in P.L. 116-260
to the First Round in the CARES Act (P.L.
116-136)
Updated January 22, 2021
At the end of 2020, lawmakers included a second round of direct payments in the Consolidated
Appropriations Act, 2021 (P.L. 116-260). The payments equal $600 per eligible individual ($1,200 for
most married couples) plus an additional $600 per eligible child, phasing down for higher-income
households. The first round of direct payments was enacted in the CARES Act (P.L. 116-136) in March
2020.
As with the first round of direct payments, the second round of payments are structured as a new one-time
refundable credit against 2020 income taxes. Generally, these payments are being automatically issued by
the Treasury based on 2019 tax data until January 15, 2021. Eligible households who do not automatically
receive a second payment (or who receive less than they would based on their 2020 income and family
size) are to generally be able to receive the payment (or receive an additional payment) as a refundable
credit when they file their 2020 income tax return. These payments are not taxable and do not count as
income or resources for a 12-month period in determining eligibility for, or the amount of assistance
provided by, any federally funded public benefit program.
Table 1 summarizes the second round of payments and compares them to the first round enacted in the
CARES Act.

Table 1. Major Provisions of First and Second Round of Direct Payments

First Round of Direct Payments Second Round of Direct Payments
(CARES Act | P.L. 116-136) (P.L. 116-260)

Payment amount $1,200 per eligible individual $600 per eligible individual
$2,400 for married joint filers $1,200 for married joint filers

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First Round of Direct Payments Second Round of Direct Payments
(CARES Act | P.L. 116-136) (P.L. 116-260)

Additional $500 for each qualifying child Additional $600 for each qualifying child
(i.e., dependent child under 17 years old as (i.e., dependent child under 17 years old as
defined for the child credit). defined for the child credit).
Phaseout Total payment amount phases out by 5% of Same as CARES Act
adjusted gross income over thresholds:
$75,000 singles
$112,500 heads of households
$150,000 married joint filers

Eligibility Everyone except:a Everyone except :a
 Nonresident aliens  Nonresident aliens
 Dependents of other taxpayers  Dependents of other taxpayers
 Individuals who died before January 1,
2020 b

ID requirement Prior to enactment of P.L. 116-260, all Generally all eligible individuals who are
eligible individuals generally had to have a unmarried (i.e., file their taxes as single or
Social Security Number (SSN) for the head of household) must have an SSN for
household to receive a payment.c In other the household to receive a payment
words, married couples in which one (including any amounts for qualifying
spouse did not have an SSN—and instead children).c For eligible individuals who are
used an Individual Taxpayer Identification married and who file a joint return, the
Number (ITIN)—were ineligible for the maximum amount of the credit is
payments (even if their qualifying children determined by the number of spouses with
had SSNs). an SSN. Married couples in which only one
ITINs are issued by the Internal Revenue spouse has an SSN (e.g., the other has an
Service (IRS) to taxpayers who are not ITIN) are eligible to receive up to $600
eligible for an SSN so that they can comply (instead of $1,200).
with federal tax law. ITIN users include If no eligible individual has an SSN (i.e., an
many noncitizens who are unlawfully unmarried taxpayer does not have an SSN
present or unauthorized to work in the or neither spouse of a married couple has
United States. an SSN), they cannot receive any payment
P.L. 116-260 modified the ID requirements for themselves or for a qualifying child with
so that they are the same as for the second an SSN.
round of payments. These ID requirements also apply
retroactively to the first round of payments
enacted under the CARES Act.
Automatic Issuance of For eligible nonfilers who are recipients of For eligible nonfilers who are recipients of
Payments to Certain Social Security, Supplemental Security Social Security, SSI, or certain VA benefits,
Households Not Income (SSI), or certain Department of Treasury is directed to issue payments
Required to File a Tax Veterans Affairs (VA) benefits, Treasury was based on information provided by the Social
Return (“Eligible directed to issue payments generally based Security Administration (SSA), Railroad
Nonfilers”) on their 2019 annual benefit statements Retirement Board, or VA (including but not
(e.g., SSA-1099 or RRB-1099).d limited to annual benefit statements).d

Other eligible nonfilers could use an online Other eligible nonfilers who had already
portal created by the IRS (the “nonfiler provided their information on the nonfiler
portal”) to receive payments in 2020. portal for the first round of payments are to
Otherwise, these individuals can file a 2020 receive the payment automatically based on
income tax return to receive the payments. this information. Otherwise, these
individuals must file a 2020 income tax
return to receive the payments.
Congressional Research Service 3

First Round of Direct Payments Second Round of Direct Payments
(CARES Act | P.L. 116-136) (P.L. 116-260)

Offset and Reduction for The CARES Act payments cannot be offset Same as CARES Act, except these payments
Past-Due Debts (reduced before being issued) to satisfy cannot be offset for child support debt.
certain debts owed to governmental In addition, these payments would generally
agencies, such as tax debts or be exempt from debt collection actions,
unemployment compensation debts. such as garnishment or levy, which occur
These payments can be offset for child after payments are issued.
support debt.

Budgetary Cost $292.4 billion $164.1 billion
FY2020-FY2030 FY2021-FY2030 e

Sources: CRS analysis of P.L. 116-260; the CARES Act (P.L. 116-136); and the Joint Committee on Taxation, JCX-11R-20
and JCX-24-20.
Notes: The second round of payments are extended to the U.S. territories in a manner similar to CARES Act p ayments.
a. Estates and trusts are ineligible to receive the first and second round of payments.
b. For married couples in which one spouse died before January 1, 2020, the maximum payment amount is halved (i.e.,
$600). No payment will be available to any otherwise eligible qualifying children if an eligible individual (or in the case
of a married couple, both spouses) has died before January 1, 2020.
c. Households can only receive additional amounts for qualifying children if those children have SSNs or adoption
taxpayer IDs (ATINs).
d. If a direct payment for a specified Social Security, SSI, Railroad Retirement, or VA beneficiary is deposited into the
account of a representative payee (“payee”) or fiduciary, the law explicitly states that it shall be used only for the
benefit of the entitled beneficiary. The payee and fiduciary enforcement provisions apply as under current law. This
clarification also applies to the first round of payments enacted under the CARES Act.
e. Budgetary cost estimates reflect the score for a second round of payments only. P.L. 116-260 includes retroactive
modifications to the first round of payments, including modifying the ID requirements to conform to the
requirements for the second round of payment. Overall, these changes are estimated to cost an additional $1.6 billion
between FY2021-FY2030.

Author Information

Margot L. Crandall-Hollick
Acting Section Research Manager

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IN11576 · VERSION 3 · UPDATED

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