Your Stimulus Check Eligibility Could Depend On Your Taxes
If youre right on the cusp of the income limits described below, when you file your taxes could make the difference between qualifying for a partial check or not. Thats because a third stimulus check is now arriving during tax season.
The language in the stimulus bill makes it clear that the IRS will base your next stimulus check on your 2019 or 2020 taxes, whichever is on file when it processes your payment. However, the IRS is reportedly delayed in processing new tax returns. If you made more in 2020 than in 2019, time is on your side. The new tax deadline is May 17. If you need more time, you might want to request a tax extension.
At this point of the stimulus check delivery cycle, filing taxes sooner may not be to your advantage. The IRS is prioritizing stimulus check distribution over tax returns, and when the processing happens is outside your control.
If you did already receive your third stimulus check and it was based on your 2019 taxes but you qualified for more with your 2020 return, the IRS will be sending plus-up payments to correct the amount between now and Dec. 31, 2021. If you dont receive your catch-up payment by then, youll need to claim it on your taxes next spring.
When Can I Expect To Receive The Third Stimulus Check
The IRS has already begun to send the third stimulus check out by the use of direct deposit to hundreds of thousands of Americans. If your bank account is on file, you can have received one already. The IRS will first send direct bills to those that provided their bank knowledge directly. Next, direct payments will cross to individuals whose financial institution knowledge the IRS bought from different govt agencies, such because the VA.
The IRS will start mailing physical tests round March 29, and economic impact fee cards are expected to be disbursed from April 5.
The Get My Payment device at the IRS site will inform you the status of your cost and an estimate of when you’ll obtain your check or direct deposit. The software updates as soon as each day, and you’ll need to fill in some personal information to to find out your payment standing.
Individual Taxpayers With Agi Of $80000 Or More Arent Eligible
The new stimulus check will begin to phase out after $75,000, per the new targeted stimulus plan. If your adjusted gross income, or AGI, is $80,000 or more, you wont be eligible for a third payment of any amount. However, if you make between $75,000 and $80,000, you could get a portion of the check. Youd receive the full amount if your yearly income is less than $75,000. Heres how to estimate the stimulus check total you could receive.
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Which Dependents Qualify For A Stimulus Check
Unlike the first and second round of checks, payments for dependents in the third round are not restricted to only children under 17.
According to the IRS website: “Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.”
Couples Filing Taxes Jointly
The income level eligibility criteria are different for couples who happen to be filing their taxes jointly for all these individuals, they must have earned around $150,000 as income or less than that as their adjusted gross income. Individuals who fall under their income level can receive the complete amount of $2,800 from the government.
As expected, the size of the third stimulus check received by people who earn more than the amounts mentioned above will decrease. It will keep decreasing until, at one point, higher earners with a more than average gross adjusted income will not receive anything and will not be eligible for the check.
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How To Return A Paper Check You Have Cashed Or Deposited
If you have already cashed or deposited the check , heres how you can return the money:
- Make a personal check or money order payable to U.S. Treasury.
- Write 2020EIP on the payment and include either the taxpayer identification number or Social Security number of the person whose name was on the stimulus payment.
- On a sticky note or sheet of paper, write down the reason youre sending the check or money order.
- Mail the check or money order and the explanation to your local IRS office .13
How Is The Third Stimulus Check Calculated
The stimulus plan mandates the treasury to rely on 2019 and 2020 tax returns to calculate how much you could get for the third round of stimulus checks.
Congress approved limits based on adjusted gross income ranges. This means that taxpayers making less than the minimum threshold could get the full stimulus check, while those earning above it get reduced payments until they are fully phased out at higher incomes.
You can find your AGI on IRS form 1040. This is calculated by subtracting deductions like student loan interest, health savings account payments, and contributions to a traditional IRA from your gross income.
By contrast, your gross income is the total amount of money that you made during the tax year, including wages, dividends, capital gains, rental property income and other types of revenue.
Your 2019 taxes had to be filed by July 15, 2020. And your 2020 taxes are due by the extended deadline of May 17. You can read more about when to file your tax returns for the third stimulus check, and other IRS requirements in two tax sections below.
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How Is Your Income Calculated For The Stimulus Payments
The IRS will use the AGI on your most recent processed tax return on file. While 55.7 million Americans have already filed their taxes for 2020, millions still havent filedand the IRS is also significantly behind on processing tax returns.
The IRS will use your 2020 tax return if it has been processed by the date they submit your check. If your 2020 return is not available yet, they will use the information from your 2019 tax return.
Note: On March 17, the IRS announced an extension to file your 2020 taxes. Tax returns will now be due by May 17. But if you expect that you may receive more in stimulus money based on your 2020 taxes, and you have not yet received confirmation of your stimulus payment status , you should file as soon as possible.
If you are not required to file your taxes and successfully used the IRSs non-filers tool or completed a special simplified tax return in 2020, no action is needed on your part to receive your payment.
If you do not qualify based on your 2019 income, but you will qualify based upon your 2020 income, consider filing your taxes as soon as possible. Depending on your timing, your stimulus eligibility may be determined before your 2020 tax return is processed. However, the law includes a provision to make supplemental payments in September to ensure people who qualify do not need to wait until the 2021 tax season.
Focus On What Goes On At Your Housenot The White House
Its hard not to worry as you watch billions and trillions of dollars fly out the window in Washington, D.C. And while those things matter, the truth is, you have ultimate control over your money and what choices are made in your house. You have the power to improve your money situation right nowtodaywithout having to rely on the government.
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About the author
Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.
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Looking For More Stimulus Information
Find out about stimulus checks/payments for Social Security and railroad retirement beneficiaries.
Visit the IRS economic income payment information center for additional situations not covered here.
Stay up-to-date with our coronavirus resources
We know theres a lot of information to take in these days. To help keep you informed, we created a Coronavirus Tax Resource Center where you can find the latest news and details regarding tax extension dates, stimulus relief and more.
Learn more about deducting payments made to your spouse with advice from the tax experts at H& R Block.
New Payments Differ From Earlier Economic Impact Payments
The third round of stimulus payments, those authorized by the 2021 American Rescue Plan Act, differs from the earlier payments in several respects:
- The third stimulus payment will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four will get $5,600.
- Unlike the first two payments, the third stimulus payment is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.
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Will You Get A Stimulus Check ‘plus
As the IRS explained in a news release on Thursday, these plus-up payments provide “supplemental” support for Americans whose third stimulus check had been based on information from their 2019 income tax returns, but who are now in line for a new or larger amount based on their 2020 returns.
When it started processing the latest relief payments, the IRS had to rely on the most recent data in its system. If you hadnt filed your 2020 taxes before the third round of stimulus checks was set in motion, the IRS would have used your 2019 return to determine how much money you were eligible for.
But maybe you earned less last year than you did in 2019, because of the COVID crisis. If you’ve recently filed your 2020 taxes, you may be eligible for a bigger stimulus check now so you’ll receive a plus-up to make up the difference.
Individual taxpayers whose returns show adjusted gross income up to $75,000 qualify for the full $1,400 stimulus check. The same goes for couples who file jointly and have AGI of as much as $150,000.
Will The Stimulus Affect My Taxes For This Year Or Next Year
None of the three stimulus checks are considered income, and therefore arent taxable. They wont reduce your refund or increase what you owe when you file your taxes this year, or next. They also wont affect your eligibility for any federal government assistance or benefits.
Remember, with TurboTax, we’ll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.
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Will You Have To Pay Back Money From A Previous Stimulus Check
You might. Heres why: Some people were sent stimulus checks by accident. Whoops! We knowimagine the government making a mistake, right? Heres why you might need to send your money back:
- You make more than the income limit required to receive the stimulus money.
- You were given a check for someone who has died.
- Youre a nonresident alien.
- You dont have a Social Security number.
- Youre claimed as a dependent on someone elses tax return.
If you know one of these applies to you, the IRS expects you to find the error and send the money back to them.12 So go ahead and be honest . You dont want any surprises when you go to file your taxes.
Who Gets The Third Stimulus Check
A stimulus check is a non-taxable cash payment sent to qualifying Americans by direct deposit, check, or debit card. The money can be used however you want and does not need to be repaid to the government even if you get too much.
Other names for stimulus checks include Economic Impact Payments and the Recovery Rebate Credit.
Anyone with a Social Security number who meets the income requirements is eligible for a payment including dependents of any age. This is a break from the past two relief bills, which did not include payments for dependents age 17 and over but did include smaller amounts for children.
The IRS will use the adjusted gross income on your 2019 tax return, unless your 2020 return is processed by the time payments are sent, to determine how much you receive.
Here’s who will get the full $1,400, or $2,800 for married couples:
- Single filers with AGI of $75,000 or less
- Head-of-household filers with AGI of $112,500 or less
Here’s who will get a reduced payment:
- Single filers with AGI over $75,000 and under $80,000
- Head-of-household filers with AGI over $112,500 and under $120,000
People who aren’t required to file income-tax returns could also get payments. Information collected through the IRS nonfilers tool will be used to send the checks to these recipients. Also, Social Security retirement and disability beneficiaries and Supplemental Security Income recipients who don’t file taxes can get payments.
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Important: Third Stimulus Check Qualification Details
The third stimulus checks now going out open up more avenues for people to claim a payment — so long as their yearly earnings in 2019 or 2020 fall within the brackets for receiving the third check. These new payments come with changes to the income limit for individuals and families who’d qualify for a full stimulus payment — it isn’t the same as it was for the first two rounds of checks approved in 2020. Check out the chart below for more and use our stimulus calculator to estimate how much you could get.
How Can You Check Your Stimulus Check Status
The Get My Payment tool on the IRS.gov website went live on Saturday and can help track your payment and check the status of your money.
The website notes the tool is updated once per day, usually overnight, so there’s no need to check multiple times per day.
The “Get My Payment” tool will tell you:
- Payment date
- Payment method Note: mail means you may be issued an EIP card or a check
If your payment status is not available, that means the IRS has not yet processed your payment, or you are not eligible for a payment.
If you get a message that says “Need More Information,” that means your payment was returned to the IRS because the post office was unable to deliver it. The IRS said people who got this message will eventually be able to use the tool to provide additional bank account information.
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Nonfilers: You May Need To File Your 2020 Tax Return This Year To Get The Right Stimulus Check Amount
With the second payment, the IRS used your 2019 tax returns to determine eligibility. Nonfilers, who weren’t required to file a federal income tax return in 2018 or 2019, may still be eligible to receive the first stimulus check under the CARES Act. And this group will qualify again. Here are reasons you might not have been required to file:
- You’re over 24, you’re not claimed as a dependent and your income is less than $12,200.
- You’re married filing jointly and together your income is less than $24,400.
- You have no income.
- You receive federal benefits, such as Supplemental Security Income or Social Security Disability Insurance. See below for more on SSDI.
What Else Is Included In Bidens Stimulus Package
Like we talked about before, the presidents American Rescue Plan is full of big changes. It includes some of the proposals Biden campaigned on. Heres a quick rundown:
- Increase the Child Tax Credit from $2,000 for dependents under the age of 17 to $3,000 for children ages 617 and $3,600 for children under age 6.
- Increase the Child and Dependent Care Tax Credit from a max of 35% of qualifying childcare expenses to a max of 50% of qualifying expenses .
- Keep weekly unemployment benefit payments under the Federal Pandemic Unemployment Compensation program at $300 and extend benefits under the Pandemic Emergency Unemployment Compensation program through September.
- Extend the payment relief for federally guaranteed mortgages as well as the suspension on evictions and foreclosures until September.
- Provide financial support for renters and landlords.14, 15
And theres more: Bidens plan also includes grants and loans for small businesses, aid to state and local governments, money for COVID-19 vaccine distribution and testing, money to reopen schools, support for colleges and childcare providers, and more paid sick time for folks who have COVID-19, are quarantining because of it, or are caring for family members who are sick.16
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