A $1,400 stimulus check could be hitting your bank account or mailbox soon. Most Americans will receive a third direct payment after President Joe Biden signed a $1.9 trillion COVID-19 relief bill into law on Thursday.
Most of the rules surrounding the first two payments are the same, with two big exceptions: Checks will completely phase out for higher earners faster than they did in the first two rounds. And if you can claim an adult dependent on your return — your college-age child or a disabled family member, for example — you’ll still get a payment on their behalf.
10 FAQs About the $1,400 Stimulus Check
Here’s everything we know so far about the third stimulus check. We’ll update this post as more information becomes available.
1. What are the income limits for the $1,400 payments?
The income limits for receiving the full $1,400 for single filers and heads of households, or $2,800 for married couples filing a joint return, are the same as they were for the first stimulus check and the second stimulus check. However, for people earning above these amounts, the checks would phase out at a much faster rate compared to the first two rounds.
2. Is there a credit for children?
Yes, you’ll receive an additional $1,400 for each dependent, regardless of their age. That includes not only children but adults who count as dependents. That’s one key difference between the third check and the previous two: The first two payments excluded anyone over age 17 who was listed as a dependent, which meant lots of college students and disabled people didn’t qualify.
However, the phaseout of the dependent credit applies at the same rate as the payments for people who file their own tax returns. Whether you have one dependent or 10, if you earn more than the $80,000, $120,000 or $160,000 thresholds listed above, you don’t get a dependent credit.
3. What tax year will payments be based on?
Your payment will most likely be based on your 2020 income if you’ve already filed your tax return. If you haven’t filed yet or the IRS hasn’t accepted your return, your check may be based on your 2019 return.
If you earned more in 2020 than in 2019, you could get more stimulus money if you delay filing. However, if your income dropped significantly or you had a child in 2020, you’d want to file ASAP to get the most out of this round of stimulus payments. You could also be eligible for more stimulus money from the first two checks based on your 2020 return.
4. Can I qualify based on my 2021 income?
Yes, if you aren’t eligible based on your 2020 income (or 2019 if you haven’t filed), you could get the third stimulus check as a tax refund when you file your return in 2022. That’s because the payments are an advance on a 2021 tax credit. Because lawmakers want to distribute that money ASAP, they’re basing it on 2020 or 2019 income instead of making you wait until 2022. If you have a child in 2021, you’d also be able to get a stimulus payment on their behalf next year at tax time.
And if you get a payment because of your past tax returns but you wouldn’t be eligible based on your 2021 income? Congrats. You win. There’s no “clawback” provision for stimulus checks, meaning you won’t have to pay it back.
5. I’m in college. Do I get my own check?
Maybe. You won’t be eligible to receive your own check if your parents can claim you as a dependent on their 2020 return, though in that scenario, they may receive a $1,400 credit on your behalf.
However, if you don’t qualify as a dependent for 2020 — meaning you provided more than half of your financial support for the year — file a tax return ASAP, even if you’re not required to based on your income. Not only could you qualify for the $1,400 from the third payment, but you could get $1,800 from the first two payments as a tax refund.
6. Are the checks taxable?
No. Your stimulus check isn’t taxable. That applies to this round and the previous two.
7. I’ve never filed taxes before. Can I get the third stimulus check?
Yes, but you’ll need to file a 2020 tax return, even if you’re not required to. You can use the IRS website to file for free as long as your income is less than $72,000, or you can use free tax filing software. The important thing is to file online instead of submitting a paper return. The IRS is facing an enormous backlog of mail due to COVID-19. Submitting by mail could add months to your wait time.
8. I’m on Social Security and don’t have to file a tax return. Do I have to do anything to get my check?
No. If you’re eligible based on the income threshold (see Question #1), you should qualify for a check. The IRS can get the information it needs to cut you a check from Social Security. If you receive Railroad Retirement, SSI, SSDI or VA benefits, the IRS can also get the information it needs from the appropriate agency to process your payment. No action should be required on your part.
9. I owe child support. Will I get the third stimulus check?
The third stimulus check won’t be offset for unpaid child support, so as long as you meet the other requirements, you can still expect a payment. While the first stimulus check rules required payments to be garnished for unpaid child support, parents delinquent on payments were eligible for the second round. None of the three stimulus payments have been garnished for other debts, including back taxes or unpaid federal student loans.
10. When will I get my payment?
Biden said on March 6 that checks would start going out this month. Based on what we saw with the second stimulus check, payments could start arriving in less than a week. Taxpayers who have current direct deposit information on file with the IRS will get their checks fastest. Those who file a paper tax return or who don’t receive direct deposit will likely be waiting at least a couple extra weeks.
For the past two rounds, the IRS has allowed taxpayers to track their checks using the Get My Payment tool on its website. The tracker isn’t live for the third round, but we’ll update this post when it becomes available.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]
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Source: thepennyhoarder.com