Tuesday, March 28, 2023

What Tax Year Is The Third Stimulus Based On

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Who’s Shut Out In The Final Bill


People who file their tax return using the “single” filing status with an adjusted gross income between $80,000 and $100,000 “head-of-household” filers with an AGI between $120,000 and $150,000 and married couples filing a “joint” return with an AGI between $160,000 and $200,000 won’t get a third stimulus check. These people would have gotten a reduced payment under the original bill, but they won’t get any money under the final bill sent to the president.

Under both versions of the bill, singles with an AGI above $100,000, head-of-household filers with an AGI exceeding $150,000, and joint filers with an AGI over $200,000 wouldn’t receive any third-round stimulus payments. For more on who will or won’t get a third stimulus check under the final bill, see Who Won’t Get a Third Stimulus Check Under the New Senate Plan?

To calculate the amount of YOUR third stimulus check , use our handy Third Stimulus Check Calculator. All you have to do is answer three easy questions to get an estimated payment amount.

How Will I Get The Third Stimulus Check

Most will arrive via direct deposit others will be mailed as a paper check or a prepaid debit card.

Exactly how much money you get and how it’s delivered depends on the information provided on your 2020 tax return. If it hasn’t been filed or processed yet, the IRS will look at your 2019 return.

In most cases, your payment will be delivered to the bank account or mailing address that’s listed on your tax return. If you used the nonfilers tool because you don’t file taxes, the IRS will use that same information to deliver your third payment, either to your bank account or address.

Social Security retirement and disability beneficiaries, railroad retirees, and people who received veterans’ benefits in 2020 don’t need to do anything to get the third stimulus check. They will get their payment the same way they normally receive benefits.

The IRS’s “Get My Payment” tool is the only place to check how and when your payment is going to be sent .

What If The Irs Uses Your 2019 Tax Return But You Earned More Money In 2020

If you qualify for the full third stimulus payment based on your 2019 taxes but don’t qualify based on your 2020 taxes — assuming the IRS used your 2019 return — you won’t have to pay the IRS back for that discrepancy. Here are situations where you would need to return money to the IRS.

If your circumstances changed in 2020, you may be owed more stimulus money from the IRS.

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Who Qualifies For A Payment

Taxpayers must have a Social Security number to be eligible for a payment and meet the income requirements detailed above.

While the steeper income phase out reduces the number of taxpayers qualifying for this stimulus payment, all dependents of eligible taxpayers will also receive a payment for the first time. That includes millions of college students, disabled adults and elderly Americans. Mixed-status families in which some members have Social Security numbers and some do not are also eligible, as they were for the second payment.

Like the second stimulus payment, those who owe child support should not have any of their stimulus money withheld.

How Will Dependents Get Their Stimulus Check

what tax year is the 3rd stimulus based on

One major difference between this round of checks and the last two is that dependents of any age are eligible to get money.

But to be clear: Eligibility for a stimulus check lies with the person who claims the dependent on their tax return. In most cases that’s a parent or caregiver. They’re the person who qualifies and gets paid. An additional $1,400 is added to that person’s check for each dependent with a Social Security number who is claimed on their tax return.

According to the IRS, adults who rely on another person for more than half of their expenses can be claimed as a dependent. That includes students up to age 19, or age 24 for full-time college students. Dependent adults can also include disabled people and retirees.

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You Have New Or Older Dependents

Some people may get their checks quickly, but find that the amounts are incorrect that could most likely be due to their dependents.

The third stimulus check entitles dependents to receive $1,400 each, but the IRS might not be aware of your children in some cases. For instance, if you had a baby in 2020 but haven’t yet filed your tax return, the IRS will rely on your 2019 tax return to determine how much you are owed, which won’t show the new child because they hadn’t yet been born.

Example: A couple with a baby born in 2020 should receive $4,200, but if the IRS doesn’t have their 2020 tax return, it will issue a payment of $2,800 for the two adults in the family. But IRS and Treasury officials said March 12 that families in this situation can be assured they will eventually get the additional $1,400 for their baby.

When they file their 2020 tax return, the IRS will check if they are owed more, such as in the case of a baby born last year. If that happens, the IRS will automatically issue the additional $1,400 check to the family, officials said.

Similar issues could occur for people who normally don’t file tax returns and who used the non-filers tool to report their dependents last year. Because the first two rounds of checks excluded dependents above the age of 17, the IRS didn’t count older teens and adult dependents on the non-filer tool.

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Taxation Of Third Stimulus Checks

Question: Will my third stimulus check be taxed later?

Answer: No. As with the first two rounds of payments, your third stimulus check is actually just an advanced payment of the Recovery Rebate tax credit for the 2021 tax year. As such, it won’t be included in your taxable income.

You also won’t be required to repay any stimulus check payment when filing your 2021 tax return even if your third stimulus check is greater than your 2021 credit. If your third stimulus check is less than your 2021 credit, you’ll get the difference when you file your 2021 return next year. So, it’s a win-win situation for you!

Amount Based On 2019 Or 2020 Tax Return


For third-round stimulus payments, eligibility and amounts are based on either your 2019 or 2020 return. If your 2020 tax return isn’t filed and processed by the IRS by the time the tax agency starts processing your third stimulus payment, then the IRS will use information from your 2019 tax return. If your 2020 return is already filed and processed when the IRS is ready to send your payment, then your stimulus check eligibility and amount will be based on the information on your 2020 return. If your 2020 return is filed and/or processed after the IRS sends you a third stimulus check, but before August 16, 2021 , the IRS will send you a supplemental 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 be higher or lower depending on when you file your 2020 tax return.

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What Tax Year Is The Third Stimulus Based On

Your stimulus payment eligibility is based on your most recent tax years tax returns. If youve already filed 2020 taxes, then the IRS will look at your adjusted gross income from 2020 to determine if youre eligible and if so, for how much of the stimulus payment.

However, if your 2020 tax returns arent filed yet, you can still receive stimulus money based on AGI from 2019 tax returns.

The Third Round Of Stimulus Checks Are Based On Your Most Recent Tax Filing With The Irs But Are An Advanced Payment On A Refundable Tax Credit For 2021

Just days after the American Rescue Plan was signed $1,400 direct stimulus payments began to be sent out to eligible recipients. Many Americans are already seeing those payments appearing in their bank accounts, letting families still struggling a year into the economic crisis brought on by the covid-19 pandemic breathe a sigh off relief.

The Internal Revenue Service based eligibility on the information the agency had on file when the payments were made, which could be from your tax filing in 2019 or 2020. However, if you are not eligible for a payment but your income is affected for the worse in 2021, you may be able to claimwhat is due to you through the Recovery Rebate Credit when you file in 2022.

Also Check: Direct Express Stimulus Check Deposit Date March 2021 Update

Which Of My Dependents Qualify For The Third Stimulus Check

For the third stimulus check, all your dependents qualify, regardless of age. This means that for each child or adult dependent you have, you can claim an additional $1,400.

This is different from the first and second stimulus checks, which only allowed child dependents to get the additional payment.

Questions And Answers About The Third Economic Impact Payment Topic H: Reconciling On Your 2021 Tax Return

What Tax Year Was The First Stimulus Check Based Off Of ...

Will I need to provide information about my Third Economic Impact Payment or additional payment to claim the 2021 Recovery Rebate Credit on my 2021 tax return when I file in 2022?

Maybe. While, you are not required to report the third payment on your 2021 return, you may need that information to determine whether you are eligible to claim a 2021 Recovery Rebate Credit on your 2021 tax return filed next year. This information will help you if you don’t receive a third payment or don’t receive the maximum amount this year, because you may be eligible to claim the 2021 Recovery Rebate Credit when you file your 2021 tax return.

Keep any notices you receive regarding the 2021 Economic Impact Payment and any additional payments with your 2021 tax records. These notices are mailed to each recipient’s address on file after the payment is made. This is generally the address on your most recent tax return or as updated through the United States Postal Service .

Is the Third Economic Impact Payment or additional payment includible in my gross income?

No, the Third Economic Impact Payment is not includible in your gross income. Therefore, you will not include the third payment in your taxable income on your 2021 Federal income tax return or pay income tax on the third payment. It will not reduce your refund or increase the amount you owe when you file your 2021 Federal income tax return in 2022.

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How Does The American Rescue Plan Change The Child Tax Credit

Beginning in tax year 2021 the Child Tax Credit will be expanded. The bill increases the amount that families claiming the Child Tax Credit receive from $2,000 to:

  • $3,600 for each child under 6
  • $3,000 for each child age 6-17

The credit is now fully refundable that means that you are eligible for the credit even if you dont owe taxes.

  • Although this credit is for next years tax filings, payments will also be sent in advance, over the course of the year, beginning no earlier than July 2021 so people dont have to wait to file their 2021 taxes. The IRS will likely determine eligibility based on your most recent tax filing.

Who Should File Taxes Now To Get A Larger Stimulus Check

If you expect your third stimulus check to be higher if it’s based on your 2020 tax return , then you want to file your 2020 return electronically right away. That way, you have the best chance of having it processed before the IRS starts sending out stimulus payments. Some of the things that could make your stimulus check higher if it’s based on your 2020 return include:

  • Your income was lower in 2020

  • You had a child in 2020

  • You got married in 2020 or

  • You could be claimed as a dependent on someone’s 2019 tax return, but not on anyone’s 2020 return.

Here are a few examples:

Lower Income in 2020 Nicholas was furloughed for several months in 2020. As a result, his AGI dropped from $95,000 in 2019 to $70,000 in 2020. Since Nicholas is single and doesn’t have any dependents, he would get a $1,400 third stimulus check if it’s based on his 2020 tax return. That’s because his payment wouldn’t be reduced at all, since his 2020 AGI is below the phase-out threshold . On the other hand, since his 2019 AGI was above the phase-out threshold, Nicholas would only get a $280 stimulus check if it’s based on his 2019 return. Therefore, Nicholas’s stimulus check will be $1,120 higher if he files his 2020 return before the IRS starts processing his stimulus payment.

Also Check: Is The First Stimulus Check Taxable

Why Else Should I File My 2020 Tax Return Early

If you don’t have direct deposit information filed with the IRS, filing your taxes can allow you to get that set up. You’re likely to get your stimulus payment faster through direct deposit than waiting for a physical check in the mail.

Beyond the stimulus, getting your 2020 return in early means you’ll get your refund back faster if you are due one. The IRS says those who file their returns online and are signed up for direct deposit generally get their refunds back within 21 days.

Another reason to get your taxes in sooner rather than later is security. Hackers and scammers — if they are able to get a hold of your personal information including your social security number — may be able to claim your refund before you do.

Will The Irs Tax My Third Stimulus Check


The IRS does not consider stimulus checks to be taxable income. This means that you do not have to report the money on your federal income tax return, or pay income taxes on your stimulus check.

You should also note, that if you owe taxes, you could still qualify to get a stimulus payment because the IRS does not use it to offset federal or state tax debts like it normally does with tax refunds.

For private debts, however, the American Bankers Association has pointed out a loophole in the new stimulus plan where banks and other financial services providers will be legally required to comply with court ordered garnishments. The association says that without legislation to shield your third stimulus payment, creditors or collectors can take it to pay off existing debt.

As a reference, the 2020 COVID-Related Tax Relief Act did shield stimulus payments from private debt collection: The Advance payments are generally not subject to administrative offset for past due federal or state debts. In addition, the payments are protected from bank garnishment or levy by private creditors or debt collectors.

But while your stimulus money could be taken to pay for private debt, the new offsetting rules prevent the IRS from deducting overdue child support from eligible recipients. You should keep in mind, however, that the IRS intercepted or reduced payment from the first round of stimulus checks for past-due child support.

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Who Is Eligible For The Third Stimulus Check

While eligibility is similar to the first and second stimulus checks, there are differences. There are four primary requirements:

1. Income: The income requirements to receive the full payment are the same as the first and second stimulus checks. There is no minimum income needed to qualify for the payment. Households with adjusted gross income up to $75,000 for individuals will receive the full payment. The third stimulus payment starts to phaseout for people with higher earnings. The third stimulus checks maximum income limit is lower than the first and second stimulus check. Single filers who earned more than $80,000 in 2020 are ineligible for the third stimulus check.

View the chart below to compare income requirements for the first, second, and third stimulus checks.

Income to Receive Full Stimulus Payment First Stimulus Check Maximum Income Limit Second Stimulus Check Maximum Income Limit Third Stimulus Check Maximum Income Limit
Single Filer

2. Social Security Number: This requirement is different from the first and second stimulus check.

Any family member that has a Social Security number or dependent can qualify for the third stimulus check. For example, in a household where both parents have ITINs, and their children have SSNs, the children qualify for stimulus checks, even though the parents dont.

See the chart below for further explanation of how this works.

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