Americans are likely just days away from receiving their third — and largest — coronavirus stimulus check to date, after President Joe Biden officially signed the massive $1.9 trillion US bailout plan into law on Thursday.
The bill directs the Internal Revenue Service and the Department of the Treasury to immediately send $1,400 direct payments to every eligible U.S. adult. The Biden administration sees this as a fulfillment of its pledge to send a total of $2,000 to households by 2021 stimulus checks, along with the second $600 payment from earlier.
“This landmark legislation is about rebuilding the backbone of this country and giving a chance to give the people of this country — working people, middle-class people, people who built the country — a chance,” Biden said. in an Oval Office speech as he signed the bill. . “That’s the essence of it.”
However, not everyone will see such a high economic impact payment as the third checks have steeper limits and stricter eligibility requirements than previous rounds. Some low to middle income households, especially families, will inherit larger sums of money, while others will not receive much more at all.
Here’s everything you need to know about the payments, including who qualifies, how much you’ll receive, how soon you can expect these payments, and tax tricks as we approach the 2021 filing season deadline.
Incentive Payments of $1,400: Who Qualifies and How Much Will You Get?
Eligible U.S. adults receive $1,400 per person in their household, including adult dependents such as college students.
That breaks with previous rounds of Economic Impact Payments, when dependents were only eligible for a stimulus check if they were under the age of 17. The new inclusion means 13.5 million more individuals will receive stimulus payments, according to an analysis of data from the Census Bureau.
Survivors have also not always received a check as high as adult payments, with the first round of $1,200 stimulus checks awarding them only $500. However, the second round sent $600 payments to everyone who qualified.
Still, the eligibility criteria are considerably stricter than for several rounds. A good rule of thumb: If you received a full stimulus payment last time (or at least qualified for one, if you’re still waiting for a payment), you should receive that full $1,400 amount.
Individuals earning less than $75,000 on their Adjusted Gross Income (AGI) and married applicants who collectively earn $150,000 are eligible for the full payments of $1,400 or $2,800, respectively. For example, a married couple making $140,000 along with one child and one dependent adult would receive $5,600 – $1,400 multiplied by four.
Heads of households will have to earn less than $112,500 annually to qualify for full payment.
The IRS and Treasury Department will use your most recently processed tax return to determine your eligibility for stimulus payments. For most, that’s either income based on 2020 or 2019.
After that, the payments disappear much earlier on the income scale, at $28 per $100 above the income threshold. Individuals making $80,000 a year and married couples earning twice ($160,000) don’t receive a check at all. In the previous round of $600, those payments decreased by $5 for every $100 above the income requirement, meaning they were eligible for partial payments worth $700 and $350, respectively.
Also, those above the income limit will not be able to cash a partial check by having dependents, unlike previous rounds. You would also need to have a Social Security number for every eligible person in your household to receive a check, according to the bill text.
As was the case with the previous two rounds, individuals who earned less than $12,400 in a given tax year and thus are not required to file a tax return may still be eligible for a payment. Around the time of the second stimulus check, the IRS opened a Non-Filers tool, where those Americans could enter their bank account and income information to get a check. Chances are, the agency will most likely reopen that portal.
How fast are the checks coming?
The bill gives the IRS and the Treasury Department until December 31, 2021 to distribute the third round of stimulus checks, but the chances of you waiting that long are slim.
That’s mainly because both agencies now have the experience to send two Economic Impact Payments, apparently solving many kinks and delays. The first time it took the IRS and the Treasury months to deliver those checks, a process the second completed within two weeks (although that was explicitly required by the text of the $900 billion supplementary package).
The Biden administration previously promised to send checks to millions of Americans before the end of March. Hoping to speed up the process, Biden’s aides also said the president has no intention of confirming his name or signature; instead, they are signed by an official from the Bureau of Engraving and Printing.
“We are doing everything we can to expedite and not delay payments, which is why the president’s name will not appear on the memo line of this round of stimulus checks,” White House press secretary Jen Psaki said on March 9. briefing.
Checks will be submitted via direct deposit or mailed via check or debit card. Electronic debits will be much faster, while it will take much longer to get money in your wallet in the mail.
What to do if your tax situation changes in 2020 vs. 2019
Perhaps you had a child or saw your income fall in 2020, making you eligible for a higher amount than the tax authorities now assume. You may have changed banks or moved in the past year. If you are, you’ll want to file your 2020 tax returns as soon as possible so that the IRS has as accurate a picture as possible of your financial situation.
But it’s safe to assume that IRS officials will do their job for them in the coming weeks. They may not be able to process your return by the time they start sending stimulus checks, meaning you will receive less than you should receive.
While it won’t be as soon, you will most likely be able to claim missing incentive payments when you file your 2021 taxes in 2022 by claiming a Recovery Rebate Credit. Even better, the text of the American Rescue Plan opens up the possibility of additional top-up, meaning that in the best of circumstances, you don’t have to wait an entire year to claim your check.
As with the first and second stimulus check rounds, you will most likely also be able to enter your bank account information through the IRS’s GetMyPayment tool. Stay tuned in the coming weeks for more information from the IRS on how and when to fill out that information.
What to do if your income has increased in 2020 compared to 2019
Undoubtedly, a very separate camp of Americans saw their incomes rise in 2020 from 2019, meaning they would no longer qualify for a stimulus check if they filed their returns today.
You can still wait to file your tax return and request a stimulus check. The IRS would not attempt to recover that payment, nor would it expose you to any fines or penalties, according to the current text of the bill. Economic impact payments are also not considered taxable income.
But beware: You don’t want to risk paying late by waiting so long to file your tax returns after the April 15 deadline (or June 15, if you live in Texas or Oklahoma).
What it comes down to:
The stimulus package surpasses last year’s CARES bill in total size, making it the largest economic aid package in US history, with provisions that will also boost unemployment assistance to unemployed Americans, increase a Child Tax Credit (CTC) for families and expanding housing assistance in the largest economic aid package in US history to narrowly exceed last year’s CARES law.
Stay tuned for more details from the IRS on how it plans to make these payments at the height of the 2021 tax filing season.
In his first prime-time speech on the one-year anniversary of the coronavirus outbreak declared a pandemic, Biden pointed to the bill and the added optimism surrounding vaccinations as a major inflection point after a year of extreme unrest, with the US death toll now rises above 500,000.
“Finding light in the darkness is a very American thing to do,” he said. “In fact, it’s perhaps the most American thing we do. And that’s what we’ve done.