Third Stimulus Payment Approved – What You Need To Know
It’s official: the third round of COVID-19 financial aid is on the way. As part of the American Rescue Plan, the stimulus checks (also called “economic impact payments”) are aimed at providing another round of financial relief for individuals and families. The American Rescue Plan is expected to be signed into law Friday, March 12, 2021. Continue reading to learn more about the third stimulus payments and how they will affect you.
Quick Facts: Third Stimulus Plan
- Individuals earning $75,000 or less AGI per year will receive $1,400
- Married couples filing jointly earning $150,000 or less AGI per year will receive $2,800
- Head of household filers earning 112,500 or less AGI will receive $1,400
- Each dependent claimed will be an additional $1,400
- Federal unemployment benefits of $300 a week have been extended through Sept. 6, 2021
- Unemployment benefits will be tax-free on the first $10,200 received in 2020 for households making less than $150,000 per year
How much is the third stimulus check?
The third stimulus will provide $1,400 to individuals with an adjusted gross income (AGI) of $75,000 or less. Married taxpayers who file jointly with an AGI of $150,000 or less will receive $2,800. Taxpayers who file head of household with an AGI under $112,500 will receive a $1,400 stimulus payment.
Households will receive an additional $1,400 for each dependent claimed on their most recent tax return, but only if the filer qualifies to receive their own stimulus payment.
The stimulus payment amounts will be lower and eventually phase out if you earn over those AGI limits. Unlike previous stimulus payments, the third stimulus payment will be completely phased out at an AGI of $80,000 for single filers, $160,000 for those married filing jointly, and $120,000 for a head of household.
How does the third stimulus plan impact me if I already filed my 2020 taxes?
If you filed your 2020 taxes and did not claim unemployment income, you do not need to take any action. The IRS will simply use your 2020 information to calculate your stimulus payment and deliver it to the account they have on file from your 2020 tax return.
If you filed your 2020 taxes and DID claim unemployment income and earned less than $150,000, you will want to amend your 2020 tax return to take advantage of the tax exclusion on the first $10,200 as part of the passed bill.
If you filed with TaxAct, you will be able to amend your return to allow for this new exclusion in the next few weeks. If you don’t have a copy of your original return, log back into your account and print the original return or save it as a pdf – you will need this to complete the amended return process.
How does the third stimulus plan impact me if I have not already filed my taxes?
The IRS will use your most recent tax return to determine if you are eligible for the third stimulus payment and how much.
If you saw a significant drop in income from your last tax return, filing your taxes quickly could be important as you could be missing out on the stimulus payment you are entitled to.
For example, say you reported an AGI of $95,000 in 2019, but your AGI dropped to $50,000 in 2020. If you have not yet filed your 2020 tax return, the IRS will look at your 2019 return and not issue the third stimulus payment, as your 2019 income was over the qualifying threshold.
There is still time to file ahead of the bill being signed on Friday, March 12, 2021. You can file your 2020 taxes online with TaxAct to ensure you get the maximum stimulus payment you qualify for.
If you plan to claim unemployment income (up to $10,200) and earned less than $150,000, you should wait to file your taxes in order to take advantage of the tax exclusion. This will help reduce your AGI and may help you qualify for a larger stimulus payment.
Who gets the third stimulus check?
The IRS will review your most recent tax return to see if you qualify. At least one recipient in your household must have a Social Security number for you to qualify for a stimulus payment.
When will the third stimulus checks arrive?
The IRS will issue the stimulus payments through direct deposits and mailed checks. You can check the status of your payment with the IRS’ Get My Payment tool. It will show you both how and when you will receive your stimulus payment.
How do I get the third stimulus check?
You will not need to take any action to receive the third stimulus check.
Where will the IRS send my third stimulus check?
The IRS will issue the third payment to the account they have on file from your latest tax return. The payment will come via direct deposit into your bank account, a mailed check, or through a Treasury-sponsored debit card account such as Direct Express or U.S. Debit Card.
What if I do not receive my stimulus payment?
If you do not receive the stimulus payment, the IRS will be doing a second wave of payments this summer to reconcile the third stimulus payments for anyone who has already filed their 2020 tax returns. You can also plan to claim the amount on your 2021 tax return in 2022. You will claim the Recovery Rebate tax credit on Form 1040 U.S. Individual Income Tax Return, Line 30.