The payments are included in Covid’s massive $1.9 trillion aid package and cost up to $1,400 per person, including dependents. For example, a couple with two children can receive up to $5,600. Unlike previous cycles, families now receive additional funding for adult dependents over the age of 17.
According to an estimate based on the Penn Wharton budget model, about 90 percent of American households could benefit from this program. Individuals with adjusted gross incomes of at least $80,000 per year, heads of households with incomes of at least $120,000 and married couples with incomes of at least $160,000 will be completely excluded from the third round of stimulus payments, regardless of the number of children they have.
Use our calculator below to see what you can expect.
To which year do the sales restrictions refer?
Income limits are based on the taxpayer’s most recent tax return. If they have already filed a pre-2020 tax return at the time the payment is sent, the IRS will use the 2020 adjusted gross income tax return as the basis for eligibility. Otherwise, it relies on the 2019 tax return or information provided through an online portal set up last year for people who don’t usually file tax returns.
When can I expect to receive money?
Within days of President Joe Biden signing the bill into law, the first payments to citizens’ accounts could begin.
For the previous pandemic stimulus law, the IRS began sending out a second round of payments in late December, three days after then-President Donald Trump signed the legislation. But it’s possible that the ongoing tax return season could slow things down this time.
Not all payments are immediate. Those with bank account information on file with the IRS will likely receive the money first, as it will be deposited directly into their account. Others may receive paper checks or prepaid debit cards by mail.
You’ve received the final demand letter. Are you gonna take that?
Not necessary. The same people who received the full amount in the previous two incentive rounds will receive the full amount this time, but the checks will now be paid out faster, which will exclude low-income people.
The first set, which went up to $1,200, excluded those who earned at least $99,000, a head of household with one child who earned more than $136,500, and a head of household with one child who earned more than $136,500. About 160 million payments were made and 94% of families received money.
The second round, which was $600, also went a little faster because the total amount was lower. The amount is $174,000 for individuals without children and $174,000 for individuals without children. The amount is $500,000 for married couples applying together, with no children. Again, those who earned a little more still qualified if they had children. About 158 million payments have been made and 92% of families have received them.
Payments are based on the taxpayer’s most recent tax return. For example, those who have filed a new return since last March can move in or out of the eligibility category if their income changes.
Who else is ineligible?
Immigrants who do not have a social security number are still not eligible for benefits. But their spouses and children are eligible, as long as they have a social security number. They are already eliminated in the first round.
Can you repay the IRS if you earn more in 2020?
No. If your income in 2019 was less than your salary in 2020, you will not owe a refund.
But if your income has fallen in 2020, filing your tax return now – before the payments expire – can get you a bigger check.
What if you never received your last payment but think you are entitled to it?
Most people receive the payments automatically, but many miss them – for a variety of reasons. An estimated 8 million eligible voters did not receive the first round payments made last year.
Many of these people have very low incomes and generally do not have to file a tax return. Last year, the IRS set up an online portal where you can sign up to receive money. It is not yet clear whether the agency will reopen the portal for a third round of payments.
People who have moved or changed bank accounts since they filed their last tax return may also have been overlooked.
People who were owed money in the first two payment cycles and did not receive it can claim it on their 2020 tax return in the form of a tax credit, called a recovery credit.