(CBS Detroit) – A third stimulus check seems to be getting more and more certain each day. As the economic cost of the COVID pandemic continues to rise, President Joe Biden and politicians on both sides of the corridor support putting more money in Americans’ pockets as soon as possible. Although a relief payment seems likely, how much and when remains in question.
A $ 1,400 stimulus check is part of the $ 1.9 trillion aid package proposed by the Biden government. The American Rescue Plan, in its current form, would also include more unemployment benefits, an improved child tax credit and additional help for millions of Americans in economic distress because of the ongoing COVID-19 pandemic. Democrats control both houses of Congress and signaled their willingness to pass stimulus legislation in a direct party vote, if necessary. They also paved the way for budget reconciliation, which would allow them to bypass the obstruction in the Senate and approve the stimulus by a simple majority.
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The $ 1,400 number that received so much attention seems destined to become a reality. But the real value that reaches people’s bank accounts can change based on the income limit, the number of dependents and other factors.
Last week, a group of 10 Senate Republicans filed a $ 618 billion counter offer to the American Rescue Plan. His package would reduce direct payment to $ 1,000 and limit beneficiaries’ annual earnings to $ 40,000, after which the value of the stimulus check would gradually drop to $ 0. At the end of last week, the president dismissed the idea of reducing the amount . “I’m not reducing the size of checks,” emphasized Biden on Friday. “It will be $ 1,400, period. This is what was promised to the American people. “
The idea of reducing the annual income requirement has gained some traction, however.
The previous two stimulus checks were eliminated for individuals with adjusted gross income (AGI) above $ 75,000 per year and couples with AGI above $ 150,000. (AGI is the total of your salaries, interest, dividends, alimony, retirement distributions and other sources of income less certain deductions, such as interest on student loans, alimony payments and retirement contributions.) For each dollar of income above of the limit, the previous two stimulus payments fell 5%. Therefore, the $ 1,200 payment of the CARES Act went to $ 0 for rentals over $ 99,000 ($ 198,000) and the $ 600 for the second stimulus decreased to $ 0 for rentals over $ 87,000 (US $ 174,000).
The Biden management is considering reducing the revenue cap to $ 50,000 ($ 100,000). Assuming the same five percent formula, a payment of $ 1,400 ($ 2,800) would actually be $ 700 ($ 1,400) with an annual income of $ 64,000 ($ 128,000) and $ 0 with an annual income of $ 78,000 ($ 156,000).
The thinking behind this type of change is to ensure that more money is spent in the economy in general, rather than saved. According to a survey by the Federal Reserve Bank of New York, the average percentage of the first stimulus payment that a family spent on essentials decreased with increasing income. The average percentage of the first stimulus payment that a family saved increased with increasing income. While lowering the income limit would better target the economy, it would also reduce the number of people receiving a third stimulus check and the amount received by others.
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A recent Democratic proposal kept the income limit at $ 75,000 ($ 150,000) and placed the upper limit at $ 100,000 ($ 200,000). Under this configuration, $ 1,400 ($ 28,000) in revenue increased to $ 100,000 ($ 200,000). The matter remains very undecided.
Dependent children can also affect the size of your next stimulus check. The second stimulus check included $ 600 per dependent child. A dependent child was defined as anyone under the age of 17 who lives in your home. There was no limit to the number of children. And for elimination purposes, that $ 600 has been added to the total for the adult (s). For example, an adult, who had two children, would have received $ 1,800 in January if his AGI was less than $ 75,000. That amount would have decreased to $ 1,200 at an AGI of $ 87,000; $ 600 in a $ 99,000 AGI and $ 0 in a $ 111,000 AGI.
The American Rescue Plan aims to expand the group of eligible dependents to include those over the age of 16. This group would include university students and older adults with certain types of disabilities. Such a change could make another 13.5 million people eligible to receive stimulus checks.
The value of a third stimulus check can also be affected by the recipient’s taxes. To speed up distribution, the Internal Revenue Service used the most recent tax records to determine AGI and therefore eligibility. AGI changes from year to year, as people receive increases, change jobs or become unemployed. The first exemption payment was approved in March 2020. At that time, some people had declared their 2019 taxes and others had not. Therefore, the check amount may have been based on the 2018 or 2019 taxes. The second exemption payment became law in December 2020, after almost everyone had completed their 2019 taxes. Therefore, this amount was determined in tax returns. 2019.
The third exemption payment could be signed by mid-March 2021. At that time, some people would have declared taxes for 2020. Others would not. This means that a third payment may be based on 2019 or 2020 taxes. Last year, there was significant unemployment, which often undermines the finances of individual families. If someone’s AGI changes significantly from one tax return to the next, so can the value of the next stimulus check.
When will the third stimulus check arrive? The government’s goal is to sanction the American Rescue Plan by March 14. It is also when the current $ 300 federal unemployment insurance bonus expires. Assuming President Biden is able to sign the aid package on March 14, direct deposits are likely to begin in the week of March 22, with checks beginning to arrive the week of March 29th.
House Speaker Nancy Pelosi appears to have an even more aggressive schedule, however. According to comments made last Friday, she plans to approve the American Rescue Plan in two weeks. The Senate could then approve it in a direct party vote. In this scenario, the stimulus package could pass through Congress until February 26 and be sanctioned on March 1. Direct deposits would begin to reach bank accounts on 8 March and checks would begin to be sent on 15 March. Either term could be extended as a result of the impeachment process under way in the Senate or for some other reason.
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Originally published at 2:46 pm Eastern Time, on Thursday, February 11, 2021.