Second Round Of Direct Payments: December 2020
The second round of aid, a $900 billion package which was part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed off by Trump on 27 December 2020. It provided a one-off check of up to $600, but this time, households were also able to claim an additional $600 for child dependents aged 16 or under. Those who earned under $75,000 in the 2019 tax year received the full stimulus check, while a steadily smaller figure was given to those on a higher annual income, up to a maximum phase-out limit of $87,000. The first payments, through direct deposit and paper checks with some later payments made by EIP 2 Cards, were issued between 29 December 2020 and 15 January 2021.
Those who didnt receive a stimulus payment either through the CARES Act or the December Covid-19 Relief bill were able to claim for it retroactively when they filed their federal tax returns for 2020 through the IRS Recovery Rebate Credit.
How Much Does The Third Stimulus Check Pay
The $1.9 trillion coronavirus relief plan includes a third round of $1,400 stimulus payments, topping off the $600 checks that were already approved by Congress in December 2020, and adding up to $2,000.
Congress passed the coronavirus relief plan with targeted income limits for maximum stimulus payments to individual taxpayers earning under $75,000 and joint filers making up to $150,000. But whereas the first and second rounds of stimulus payments phased out checks on a sliding scale of $5 for every $100 over the income limit, the new plan cuts off high earners at $80,000 for individuals and $160,000 for couples.
Eligibility for the third stimulus checks is based on your tax filing status. For more information on who qualifies for a third stimulus check, our tables below will help you calculate different payment options.
What Is The Recovery Rebate Credit
The recovery rebate credit is a refundable tax credit that can be claimed on your 2021 return if you did not receive your third stimulus check or received the wrong amount.
An important thing to understand about the third stimulus payment is that it was technically an advance on the 2021 tax credit. Because the IRS did not yet have access to your 2021 tax information when the advance payments were sent out, the agency relied on the most recent information they had on file for you to determine how much to send you based on that year’s income, number of dependents and other qualifying information.
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Recovery Rebate Credits Under The Coronavirus Response And Relief Supplemental Appropriations Act Of 2021 And The Cares Act:
Generally, a credit increases the amount of your tax refund or decreases the amount of taxes owed. The amount you receive for the Recovery Rebate Credit will be included as part of your refund or applied to any tax owed.
If you owe debts to the United States or certain state agencies, your tax refund may be reduced to pay those debts.
For more information about the recovery rebate credit, please visit IRSâs website at www.irs.gov/newsroom/recovery-rebate-credit-topic-e-receiving-the-credit
For general information about tax refund offset, please visit our TOP webpage at .
What Is The 3rd Stimulus Check Amount
Most households that received an earlier stimulus check will get one again, but the amounts are different this time. The baseline:
- $1,400 to each adult
- $1,400 to each dependent meaning, anyone claimed on a tax return, including older adults, disabled adults, and child dependents of any age
- For example, a family of four could potentially receive $5,600
So, do adult dependents get the third stimulus check? The minor and adult dependent eligibility is different from the second stimulus check, but there are a lot of caveats to be aware of. Its important to read through the information on the IRS website or this CNN article. A few important highlights:
- Will dependents get the third stimulus check directly? No, dependents dont receive their own stimulus checks funds are sent to the household
- You are still eligible to receive a stimulus check if you owe child support
- If you have more or fewer dependents since the last time you filed taxes for instance, a new child was born into your family you should update your number of dependents by filing your 2020 tax return
Payments will be sent out in a few weeks via direct deposit, as physical checks, or via Economic Impact Payment debit cards.
Tip: Signing up for direct deposit with the IRS could help you get your refund even faster than waiting for a check or Economic Impact Payment debit card to arrive in the mail.
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Who Qualifies For The Third Stimulus Payments
Generally, if youâre a U.S. citizen and not a dependent of another taxpayer, you qualify for the full third stimulus payment. In addition, your adjusted gross income canât exceed:
- $150,000 for married filing jointly
- $112,500 for heads of household
- $75,000 for single filers
A partial payment may be available if your income exceeds the thresholds. However, you will not receive any payment if your AGI is at least:
- $160,000 for married filing jointly
- $120,000 for heads of household
- $80,000 for single filers
The full amount of the third stimulus payment is $1,400 per person and an additional $1,400 for each qualifying dependent.
Stimulus Update: Irs Announces All Third
The IRS announced on Thursday, Jan. 26 that all third-round Economic Impact Payments have been sent out. However, people can still claim any remaining stimulus money theyre owed on their 2021 income tax return as part of their 2021 Recovery Rebate Credit.
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The IRS noted that some Economic Impact Payments from 2021, which were advance payments of the 2021 Recovery Rebate Credit, may still be in the mail but the IRS is no longer issuing payments as required by law. Through Dec. 31, the IRS issued more than 175 million third-round payments totaling over $400 billion to individuals and families.
The IRS began issuing Letter 6475, Your Third Economic Impact Payment, in late January to recipients of the third-round Economic Impact Payment. This letter will help recipients determine if they should claim the Recovery Rebate Credit on their 2021 tax returns.
According to the IRS, some families may not have received the full amount of their third-round Economic Impact Payment because their circumstances in 2021 were different than they were in 2020. Reasons include:
The IRS began accepting tax returns on Jan. 24 and you must claim the 2021 Recovery Rebate Credit on your 2021 income tax return to get this money.
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Avoid Processing Delays When Claiming The 2021 Recovery Rebate Credit
The IRS strongly encourages people to have all the information they need to file an accurate return to avoid processing delays. If the return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund.
To claim the 2021 Recovery Rebate Credit, individuals will need to know the total amount of their third-round Economic Impact Payment, including any Plus-Up Payments, they received. People can view the total amount of their third-round Economic Impact Payments through their individual Online Account. The IRS will also send Letter 6475 through March to those who were issued third-round payments confirming the total amount for tax year 2021. For married individuals filing a joint return with their spouse, each spouse will need to log into their own Online Account or review their own letter for their portion of their couple’s total payment.
The IRS urges recipients of stimulus payments to carefully review their tax return before filing. Having this payment information available while preparing the tax return will help individuals determine if they are eligible to claim the 2021 Recovery Rebate Credit for missing third-round stimulus payments. If eligible for the credit, they must file a 2021 tax return. Using the total amount of the third payments from the individual’s online account or Letter 6475 when filing a tax return can reduce errors and avoid delays in processing while the IRS corrects the tax return.
The 2021 Stimulus Payment
On March 11, 2021, the American Rescue Plan was signed into law. It called for sending a third round of stimulus checks to Americans. The American Rescue Plan authorized a $1,400 stimulus payment to eligible people. Learn more about it on the IRS website. Most people already received their payments, which were based on income reported on their 2019 or 2020 tax return.
If you believe you did not get all or part of the $1,400 stimulus from the American Rescue Plan of 2021, you should claim this as a recovery rebate credit on your 2021 tax returnLearn where to get help filing your taxes.
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How The Third Stimulus Check Became Law
The American Rescue Plan was signed into law on March 11, authorizing a third round of stimulus checks that pay a maximum of $1,400 for millions of Americans. Targeted income limits, however, exclude individuals earning over $80,000 and joint tax filers making more than $160,000.
Biden said at the signing of the bill: this historic legislation is about rebuilding the backbone of this country and giving people in this nation working people and middle-class folks, the people who built the country a fighting chance. Thats what the essence of it is.
House Democrats had moved the $1.9 trillion COVID-19 relief bill to Bidens desk with a 220-211 vote just one day earlier. But progressives in the party expressed concern over Senate amendments that excluded higher-earning taxpayers from getting a stimulus payment.
Biden agreed to narrow income level requirements as a concession to moderate Senate Democrats who wanted to cap payments for individual taxpayers at $80,000 and joint tax filers at $160,000.
The Senate bill narrowly passed with a 50-49 vote on March 6 after an overnight marathon of disputed amendments and negotiations. A 50-50 tie between both parties was avoided because Senator Dan Sullivan could not vote after returning to Alaska for a family funeral.
What About Student Loan Forgiveness
Lawmakers proposed a separate plan to forgive $50,000 of federal student loan debt per person. This would cancel out the debt of roughly 80% of federal student loan debtors.
We will continue to update this article as we receive information. We encourage you to consult government websites for the most up-to-date information.
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Your Stimulus Payments Won’t Be Taxed But There Is One Exception
The IRS doesn’t consider stimulus payments to be income, which means you won’t be taxed on your stimulus money. That also means a direct payment you get this year won’t reduce your tax refund in 2021 or increase the amount you owe when you file your 2020 tax return. You also won’t have to repay part of your stimulus check if you qualify for a lower amount in 2021. If you didn’t receive everything you were owed this year, you can claim your full stimulus check amount as a Recovery Rebate Credit on your 2020 federal income tax return when you file this month .
However, another big caveat here: If you are filing for any missing stimulus money as a Recovery Rebate Credit on your tax return this year, the IRS can potentially garnish that money to pay for any back taxes you owe. Again, an independent taxpayer advocacy group within the IRS is working with the agency to address this issue to protect those funds for vulnerable taxpayers.
Is the stimulus money really yours? That depends.
Who Is Eligible For The Recovery Rebate Credit
According to the IRS, most people who were eligible for the third round of payments have already received their stimulus checks but there are a few situations why someone might not have received it or received the wrong amount. For example:
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You’re claiming a new dependent in 2021 .
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Your marital status changed in 2021.
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Your adjusted gross income from 2019 or 2020 was high enough to make you ineligible for a stimulus check, but your 2021 AGI is now lower and within the qualifying threshold.
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You did not have a Social Security number but received one by the 2021 tax deadline.
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How Is The Third Stimulus Check Calculated
The stimulus plan mandates the treasury to rely on 2019 and 2020 tax returns to calculate how much you could get for the third round of stimulus checks.
Congress approved limits based on adjusted gross income ranges. This means that taxpayers making less than the minimum threshold could get the full stimulus check, while those earning above it get reduced payments until they are fully phased out at higher incomes.
You can find your AGI on IRS form 1040. This is calculated by subtracting deductions like student loan interest, health savings account payments, and contributions to a traditional IRA from your gross income.
By contrast, your gross income is the total amount of money that you made during the tax year, including wages, dividends, capital gains, rental property income and other types of revenue.
Your 2019 taxes had to be filed by July 15, 2020. And your 2020 taxes are due by the extended deadline of May 17. You can read more about when to file your tax returns for the third stimulus check, and other IRS requirements in two tax sections below.
Can A Nursing Home Or Assisted Living Facility Take The Payment From Me
No. If you qualify for a payment, its yours to keep. If a loved one qualifies and lives in a nursing home, residential care home or assisted living facility, its theirs to keep. The facility may not put their hands on it or require somebody to sign it over to them. Even if that somebody is on Medicaid.
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What About People With Itins
You still need a work-authorizing Social Security Number to be eligible for this stimulus. However, there are important changes since the first round of stimulus checks.
- In the first stimulus rollout, any non-SSN holder on a joint return made everyone on that return ineligible. Big change: The new rounds of stimulus has corrected this problem. If you filed a joint return with a non-SSN holder, you are still eligible for the stimulus. See the below hypotheticals.
- Situation: A single tax filer has an Individual Taxpayer Identification Number but no Social Security number .
- This person is ineligible for the stimulus.
Amount Based On 2019 Or 2020 Tax Return
For third-round stimulus payments, eligibility and amounts were based on either your 2019 or 2020 return. If your 2020 tax return wasn’t filed and processed by the IRS by the time the tax agency started processing your third stimulus payment, then the IRS used information from your 2019 tax return. If your 2020 return was already filed and processed when the IRS was ready to send your payment, then your stimulus check eligibility and amount was based on the information on your 2020 return. If your 2020 return was filed and/or processed after the IRS sent you a third stimulus check, but before December 1, 2021, the IRS sent you a second “plus-up” payment for the difference between what your payment should have been if based on your 2020 return and the payment actually sent based on your 2019 return. As a result, your third stimulus check may have been higher or lower depending on when you filed your 2020 tax return.
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Getting A Missing Check Can Be Difficult But Worth The Trouble
by Adam Shell, AARP, February 4, 2022
Nobody wants to leave money on the table, especially a stimulus payment from the U.S. government that theyre eligible for but didnt receive. In late January the Internal Revenue Service announced that all third-round stimulus checks had been sent. But the IRS also noted that not all eligible Americans received the full amount theyre entitled to.
The good news? Theres still time to get whats owed to you.
Uncle Sam which issued 175 million third-round payments, totaling over $400 billion, through the end of 2021 reminded people that they can claim any remaining stimulus money theyre entitled to but didnt get by claiming the Recovery Rebate Credit on their 2021 income tax return.
The rebate, which comes as a tax credit of up to $1,400 per eligible person on your 2021 return, will either lower the amount of tax you owe or boost the size of your refund. The golden prize of a tax return is a tax credit, says Mark Steber, chief tax information officer at Jackson Hewitt, a tax preparation service. The Recovery Rebate Credit is a dollar-for-dollar tax-liability offset.
