Waiting For The Third Stimulus Check: All You Need To Know About It

Stimulus Check
Third Stimulus Check

We are on the home run of the Covid-19 payments and the third stimulus check should be on its way soon. The payment is part of the nearly 2 Trillion relief package approved on Saturday after some changes in the Senate It is expected to be signed immediately after a concluding vote, hopefully on Wednesday.

It will immediately bring an overwhelming majority of American households a giant step closer to receiving their payment. It could be as high as 90% according to estimates from Penn Wharton Budget Model. It is also expected to bring billions of dollars for municipalities and states, small businesses, schools, and many more across the spectrum.

What To Expect Out Of The Third Stimulus Check

$1,400 is the maximum each individual can expect, including dependants. Thus, a family of four, including two children can expect to get as much as $5,600. Even adult dependents above 17 years are eligible for the third stimulus check.

Individuals with adjusted gross income, less than $75,000, married couples with earnings below $150,000, can expect The maximum amount as part of the stimulus check. The same rule applies to household heads (single parents, for instance) with earnings below $112,500. Adjusted Gross Income (or AGI) is the gross income less a number of expenses incurred, and tax contributions made.

At What Slab Of Income Do I Become Ineligible

Individuals with income above $80,000 of adjusted gross earnings and also married couples with combined earnings of $160,000 are out of the ambit of the third stimulus check. The same goes for household-heads with earning of not less than $120,000. The number of children will not be a factor.

The Year Where All Calculations Are Based Upon

The above income figures have been based upon the taxpayer’s last return. For those taxpayers who have submitted their 2020 returns, the IRS shall consider that as the year for calculation. For others, the 2019 return will be the basis for calculation.

When Exactly Can I Hope For The Third Stimulus Check?

Third Stimulus Check
Third Stimulus Check

With Biden expected to sign the bill before the end of this week, Americans can expect to get the amount within weeks. The house is projected to vote on Wednesday and take a step closer for the $1.9 T Covid-19 Relief Bill to become law. This should come just days before the December stimulus check is set to expire.

During the earlier round of stimulus payments, the IRS had begun despatching the payments 3 days after the presidential signature at the end of December. But the process might get delayed as we are bang in the middle of the tax filing season.

People with their records already with the tax authorities can expect to benefit earlier. This is because the amount will be directly credited to their bank. Others have to wait for their prepaid cards or stimulus checks.

Will The List Of Beneficiaries Be A Repeat Of The Previous Stimulus Payments?

Things will be a little different this time around. Americans who got the full tranche of the payment in a previous couple of rounds can expect a repeat even this time around. But the income ceiling for the eligible has been lowered to $80,000 for individuals and $160,000 for families. The payment is expected to phase out earlier this time around.

The Previous Rounds Of The Stimulus Check

Third Stimulus Check
Third Stimulus Check

People received $1,200 in the initial round. Individuals with earnings above $99,000, families with one child and earnings of $136,000, and married but childless couples with earnings above $198,000 were excluded from the list of the beneficiaries of the third stimulus check. But families with children who could earn a little more were still eligible for the stimulus check. The payment figures in the first round were 160 million. 94% of the families benefited from the largesse.

$600 was paid in the second round. As the amount this time was smaller, this installment was phased out faster. The cut-off was at $87,000 per annum for individual tax filers with no children.  The corresponding figure was $174,000 per annum for married couples without children. Couples with children and earning slightly more were still entitled. The number of payments that went out was 158 million. 92% of all families received the second round of payment.

The payments were calculated based on the latest tax return filed by the family or the individual. So individuals and families who have already filed the return for 2020 could see an alteration in their status.

Others Who Might Become Ineligible For The Third Stimulus Check

Illegal immigrants who are not in possession of their Social Security numbers are not eligible. But their children or spouses might be eligible if they have their Social Security numbers. These people had been debarred from the primary round.

Will I Be Liable To Return Money Later If My Income Goes Above The Limit After Filing The 2020 Return

Tax filers do not have to refund any money if their earnings crossed the limit in 2020 when they had received their third stimulus check based on 2019 tax return figures.

But they can expect a bigger payout if their income has come down in 2020 and they file their tax returns before the third stimulus check is dispatched.

Is It Possible To Claim Payments From The Previous Two Rounds Along With The Third Stimulus Check?

People, especially those who filed returns regularly got their amount automatically in the previous two rounds. But a significant number of people missed out in the previous rounds. The figure of people who were eligible but did not receive the payment in the previous two installments is a whopping 8 million.

A majority of them were poor and did not file their tax returns. The Internal Revenue Service set up a portal last year for people to register and claim the money. It is still not clear if the IRS will repeat the process this time around for the third stimulus check.

Another group of people who could miss out on the third stimulus check are those who have moved and failed to inform the tax authorities about the change in address.

But those eligible to receive money in the previous two rounds of the stimulus payments but could not receive it can now claim them as a tax credit at the time of filing the tax return for 2020. The Recovery Rebate Credit, as the system is known, and individuals and families are required to file a tax return for 2020 to claim the same, even if they are not required to file their tax return for 2020.