Does your family qualify for a stimulus payment? We would like to know how you are going to spend it. Email money reporter Alicia Adamczyk at [email protected].
House Democrats passed the $ 1.9 trillion American Rescue Plan Act on Wednesday, ensuring that millions of American families will receive a third round of direct stimulus payments.
The bill extends federal unemployment insurance benefits until September 6, 2021 and increases the current child tax credit to 2021, among many other provisions. It will also send about 89% of taxpayers a third direct payment in the amount of up to $ 1,400 for each individual and their dependents.
President Joe Biden is expected to sign the bill later this week. After that, the Internal Revenue Service (IRS) will begin sending payments to eligible families.
Here’s what you should know about the third round of stimulus payments.
How much are the payments worth?
The third economic impact payment is worth up to $ 1,400 per individual and dependent.
Single filers earning an adjusted gross income (AGI) of up to $ 75,000 and heads of households earning up to $ 112,500 will receive $ 1,400, and couples earning up to $ 150,000 are eligible for $ 2,800. These taxpayers will also receive $ 1,400 for each dependent.
Thereafter, there is a sharp reduction in revenue: payments drop to zero for single registrars at $ 80,000, for heads of households at $ 120,000 and for couples at $ 160,000 AGI. The taxpayer will receive the same amount for each dependent.
The phasing-out fee is not uniform for the third round of direct payments, according to the Tax Foundation. It will depend on the situation of the taxpayer and the number of dependents.
Unique filers, for example, will have a 28% phasing-out fee, meaning they will receive $ 280 less for every $ 1,000 over $ 75,000 they earn, says Garrett Watson, senior policy analyst at Tax Foundation. An individual with an AGI of $ 77,000 would receive $ 840.
At the same time, while a couple without dependents would also see a 28% phasing out rate, a couple with a dependent would have a 42% phasing out rate. A couple with a dependent and an AGI of $ 155,000 would receive $ 2,100 in total.
To see how much relief you can receive, use this calculator.
Who qualifies for a payment?
Taxpayers must have a Social Security number to be entitled to a payment and to meet the income requirements detailed above.
While the gradual reduction in income will reduce the number of taxpayers who qualify for this stimulus payment, all dependents on qualified taxpayers will also receive a payment for the first time. This includes millions of college students, adults with disabilities and elderly Americans. Mixed-status families – where some members have a social security number and others do not – are also eligible, as they were for the second payment.
As the second stimulus payment, those who owe alimony should not have their stimulus money withheld.
What fiscal year are payments based on?
Payments will be based on AGI 2020 if a taxpayer has already filed tax returns for the past year. Otherwise, they will be based on 2019 revenue.
Are payments taxed?
When will payments be disbursed?
Biden said that some of the payments could be disbursed in late March. The IRS began sending the previous round of stimulus payments a few days after the last bill was passed in December.
Like the other two payments, taxpayers can track the status of their payments with the IRS’s Get My Payment tool. Note that this tool has failed in the past and can be overwhelmed when many people try to use it at the same time.
How will payments be sent?
Payments will be sent mainly by direct deposit, as well as in the other two rounds.
If the IRS does not have your direct deposit information, you can receive a paper check or prepaid debit card in the mail.