Now that all stimulus payments have been issued by the Internal Revenue Service (IRS), the discussion turns to the upcoming third round of inspections under the American Rescue Plan. The massive $1.9 trillion bailout package, which includes direct payments to most Americans, is expected to begin within days of the legislation becoming law — signed by President Joe Biden on March 11, 2021.
Questions began to arise about the amount, who qualified, and when the stimulus would come. The following information will help you understand what’s coming and what you might need to do to get funding.
Key Takeaways:
The third round of $1,400 personal stimulus payments is part of the American Rescue Plan that President Biden signed into law on March 11, 2021.
Dependents will also receive $1,400, including those over the age of 17.
Payments may begin to be issued within days of the legislation becoming law.
Tax season may create problems that were not encountered with the previous two stimulus payments, but there are ways to avoid them, including filing now for 2020.
If you missed the opportunity to get a stimulus payment, then you may need to wait for the Recovery Rebate Credit for 2021 taxes (filed in 2022).
Will I get a third stimulus check?
If you are an eligible U.S. citizen or resident alien (not eligible to claim as a dependent under someone else’s tax return), you may receive stimulus payments. In addition, every eligible dependent, regardless of age, is also eligible.
The American Rescue Plan Act of 2021 defines a dependent as any dependent for income tax purposes. This differs from previous stimulus payments, which provided for child dependents under the age of 17. The proposed legislation also includes mixed-status families where at least one family member has a Social Security number, similar to how such families are included in a second stimulus.
$1,400
for income-eligible individual adult taxpayers and each of their dependents will receive under the American Rescue Plan Act of 2021.
How much will I get?
The third coronavirus stimulus package calls for a payment of $1,400 ($2,800 per married couple) for each eligible adult and $1,400 for each dependent.
Single taxpayers will receive a full payment of $1,400 with a 2020 adjusted gross income (AGI) of $75,000 or less. For couples, it’s $2,800 and an AGI of $150,000 or less. If you have not filed your 2020 taxes at the time of inspection, then your stimulus package will be based on your 2019 AGI. The amount you receive will be phased out and disappear with $80,000 for individuals and $160,000 for combined returns.
After being passed by both houses of Congress, President Biden signed the legislation into law on March 11, 2021. It is expected that $1,400 will begin paying individuals directly within days of the legislation becoming law.
When will I receive my money?
With Biden signing legislation on March 11, 2021, payments could begin as early as the week of March 15.
Taking a more conservative approach, guided by the IRS’s schedule for the second round of stimulus checks, direct deposit payments could begin as early as March 22, 2021 for those who previously received a second stimulus check.
Will there be an income limit?
Yes. Your Adjusted Gross Income (AGI) will be used to determine if you qualify and, if so, how much you will receive.
If your AGI for 2019 or 2020 is $75,000 ($150,000 for joint returns and surviving spouse), then you will receive the full amount. For AGI above these amounts, your payment will be reduced proportionally until it reaches $80,000 and $160,000, respectively.
For heads of households, the amounts are $112,500 and $120,000, respectively.
How does tax season affect my stimulus payments?
Taxes for 2020 are due on May 17, 2021 (extended from the original April 15, 2021 (deadline due to the coronavirus pandemic)). The IRS began accepting tax returns on February 12, 2021. This means that your third-round stimulus payments may arrive in the middle of tax season. This alone creates questions like, “Do I need to file my 2020 taxes now?” Will the IRS accept my 2019 income? Of course, “does that mean stimulus payments will be delayed?”
Due to the February 2021 winter storms in Texas, Oklahoma, and Louisiana, the IRS has postponed the 2020 federal personal and corporate tax filing deadline in those states to June 15, 2021.
You don’t need to file your 2020 taxes immediately when answering the first two questions, but you may need to do so depending on your income in 2019 and 2020. (See “What should I do now?”) below.) The IRS will use the latest year they have on file when processing your stimulus package. This means that if all they have is your 2019 returns, then this is what they will use; If you earned less in 2020, it might be better for you to use that number.
According to the IRS, while your stimulus check and even your refund check may be delayed this year, the additional programming and testing that led up to late February 12, 2021, the start date of the tax season, makes this unlikely.
What should I do now?
Before the third stimulus payment, there are several things you can do now to make sure things go as smoothly as possible.
Make sure the IRS provides you with direct deposit information so you can be among the first to receive stimulus payments.
If you haven’t filed your 2020 taxes, consider any differences between your 2019 and 2020 income. If the IRS uses your 2019 taxes, and you receive more taxes than you did with 2020, you may not have to pay back that money.
Conversely, if you received a stimulus package based on 2019 and are actually eligible for more stimulus packages in 2020, you can apply for the difference as a Recovery Rebate Credit when you file your 2021 taxes in 2022.
If you have a tax refund in 2020, or have a pre-stimulus credit supplement, then you may want to apply now to get the money.
To avoid not receiving your third stimulus package in 2022 and having to claim it as a credit, even if you don’t normally have to file income taxes, consider doing so this year to make sure you’re in the IRS system.
