As the $1.9 trillion Covid-19 relief bill is on its way to becoming law, we would prefer to know beforehand the amount we might expect. As the calculations are a bit complex, the figure of $1,400 per individual for the third stimulus check is not exact.
It is the upper limit and would depend on many factors including the members of a family and their annual income. Rules have changed from the first two rounds of stimulus check. For instance, adult dependents above 17 years will also be counted this time.
Counting as a percentage, approximately 90% of the American households can expect to get their share of the third stimulus check, as estimated by the Penn Wharton Budget Model. All individuals with earnings of $80,000 of AGI (AGI or Adjusted Gross Income is the gross income less several expenses incurred, and tax contributions made).
Household heads with earnings equal to or above $120,000 per annum, and also married couples earning $160,000 and above will not receive the third stimulus check. The number of children will not affect the outcome.
Calculating What One Can Expect From The Third Stimulus Check
The last filing of tax returns will be taken as the basis for calculating the third stimulus check for individuals and others. If an individual has filed their 2020 tax returns, the Internal Revenue Service will base their eligibility on that year. For other taxpayers, 2019 will be the year for calculating the amount of the third stimulus check. Information submitted on a portal that has been set up by the IRS will be the basis for those who do not file returns.
When Can One Expect Their Third Stimulus Check
The Bill has already been cleared by the Senate. It will return to the House and should reach the President by this week. The initial payments can be expected within days from the presidential signature. At the end of December, the IRS has begun dispatching the amount within three days of the president signing the bill. But as the tax filing period is on, the third stimulus check might be delayed a bit.
Those who have their bank account information with the Internal Revenue Service will receive the payments first as they will get it directly by way of transfer. Others who get it through preloaded debit cards and paper checks will have to wait a bit more.
Will All Those Who Received The Previous Stimulus Checks Receive It Even This Time?
It isn’t that simple. People who have received it in full in the last two rounds might get the complete payment this time around. But as the stimulus checks will get phased out faster, many people can expect to lose out this time around. The third stimulus check will not benefit those who earn more than $160,000 a year. The corresponding figure for individuals is $80,000. Individuals earning less than $75,000 and couples earning below $150,000 will get their full payment. Single parents who have at least one dependent, and earn $112,500 or below, can expect to get the full amount of $1,400. So it becomes obvious that the payments will phase out quicker for the third stimulus check.
Adult dependents were not eligible in the previous two rounds. But this time around, adult dependents including college-going students will be entitled to the third stimulus check.
Was It The Same In The First Two Rounds?
During the first round, individuals with earnings above $99,000 were excluded from the $1,200 paid in the first round. The corresponding figure for household heads was $136,500, while for married couples it was $198,000. There were exceptions. For instance, families with children and with earnings above the limit could still expect a payout. The number of payouts was 160 million in the first round. 94% of the families benefited.
As the amount was smaller in the second round ($600), it phased out quicker. But not all who received the first stimulus payment of $1,200 in the initial round that went out last spring were eligible for the second installment of $600. For individuals tax returnees without children, the upper limit was $87,000 and for married couples without children, $174,000. Those having children got more. Around 158 million individuals and families benefited which was 92% of the total.
All payments were based on the last return. As a result, people who have already filed their 2020 return could be denied the third stimulus check if their earnings have increased beyond the limit this time around.
Other People Who Might Be Losing Out On The Third Stimulus Check
Immigrants without proper documents and Social Security numbers will not be eligible for the third stimulus check. But their children and spouses could still be eligible if they have the Social Security number and the right documents. They were denied the stimulus check in the initial rounds.
Will Earning More In the year 2020 Mean That An Individual Or Family Will Owe Money To The Internal Revenue Service?
If income increases in 2020 over the 2019 figure, the IRS is not owed anything. But on the brighter side, if income in 2020 is lower and individuals or families file their tax returns before the checks are dispatched, they could stand to gain and receive a bigger third stimulus check.
Can those denied in the first two rounds apply if they think they are eligible?
Numerous people lost out in the first two rounds. The numbers are noteworthy, around 8 million entitled individuals and families missed out on the $1,200 and $600 stimulus checks.
A significant number of them were from the lower-income groups and deserved the support. They are not obligated to file their tax returns. The Internal Revenue Service had set up an online portal last year for non-filers to register and avail of the stimulus checks. It is unclear if the IRS will do the same this time too.
People who changed their homes or those who closed down their bank accounts or even changed their banks might also have lost out on the payments in the first two rounds.
Can People Who Lost Out In Payments In The First Two Rounds Claim Them Now?
Those who are due payments in the first and second round of the stimulus check and failed to receive any amount can apply for the same as a tax credit on their income tax return for the year 2020. This process is known as the RRC, or the Recovery Rebate Credit. The flip side is that those who are not required to file an income tax return for 2020 will still have to file a return to claim the Recovery Rebate Credit.