Last week President Biden signed the American Rescue Plan Act, which included many relief provisions for taxpayers, including a third round of economic impact payments. Like the first two rounds, taxpayers will not need to take any action to receive their stimulus payment.
Qualifying individuals will receive economic impact payments of $1,400 for individuals ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent, including college students and qualifying relatives who are claimed as dependents.
For individual taxpayers, the payments will begin to phase out at an Adjusted Gross Income (AGI) of $75,000, and will be completely phased out at an AGI of $80,000. For those married filing jointly, the payments will begin to phase out at an AGI of $150,000 and end at an AGI of $160,000. For heads of household, the payments will begin to phase out at an AGI of $112,500, and end at an AGI of $120,000.
Filing Your Tax Return
If you haven’t filed your 2020 tax return yet, the IRS will use your 2019 tax return to determine your eligibility, and the size of payment you will receive. If your address or banking information has changed since you filed your 2019 tax return, or if the number of your dependents has changed (for example, if you had a baby since you filed your 2019 tax return) you may want to file your 2020 return sooner than later, to ensure that the IRS has the correct information for calculating and sending your payment.
If you have already received your stimulus payment based on your 2019 tax return, and the IRS determines that you are owed more after processing your 2020 tax return (based on loss of income in 2020 or a change in dependents, for example), the IRS will automatically issue an additional check at that time.
For individuals who are not required to file tax returns (such as retirees on social security), the IRS now urges non-filers to file a 2020 tax return to ensure that they get all of the payments and tax credits they are owed. Additionally, it is best to file an electronic return if possible, as the IRS has indicated that similar to last year, there will be delays with 2020 returns filed on paper due to the ongoing pandemic.
The ‘Get My Payment’ tool on the IRS website is available for taxpayers to check the status of their stimulus payments.
If you have questions about the third round of stimulus payments, leave a comment below or feel free to contact me directly, I’m happy to help!