1. Who will get checks, and for how much?
Individuals who earn as much as $75,000, or couples making $150,000, plus their children or adult dependents, qualify for the full $1,400 per person. Single parents with at least one dependent who earn $112,500 or less also get the full amount. Families in which some members have different citizenship and immigration classifications are also eligible for a payment, if at least one person has a Social Security number. The payments phase out much more quickly than in previous rounds: An individual with income of $80,000, or a couple with $160,000, get nothing. That’s the result of a last-minute compromise to maintain the support of moderate Democrats who wanted to more narrowly target the money.
2. How will the IRS determine my income?
It will use the most recent adjusted gross income in its system. So if you’ve already filed a tax return with 2020 income, that will likely be used. If you haven’t submitted your taxes yet this year, the agency will rely on your 2019 income. However, the payment is technically based on the income you earn in 2021, which isn’t yet known. If you earn less this year than in prior years, you can claim any missing payments on the tax return you file next year. But good news: If you earn more this year and would qualify for a smaller payment or no payment at all, you won’t have to send the money back.
3. Should I wait to file my 2020 tax return?
If you qualify for a bigger stimulus check based on your 2019 income, compared to your 2020 earnings, it’s fine to wait to file. Just be sure that you submit all your paperwork and any taxes due by April 15 to avoid penalties and fees. There are also legal ways to reduce your adjusted gross income if your income is likely to land just slightly above the qualification thresholds. Contributing more to tax-favored retirement or health savings accounts or deferring income, such as waiting to sell a business stake or some stock, could keep your income within the limit to qualify for the payment.
4. When and how will I get the check?
The IRS hasn’t yet announced a timeline for releasing the payments. In the two previous rounds, the agency first sent direct deposit payments to those for whom it had bank account information on file, then mailed paper checks or pre-loaded debit cards to everybody else. In round one, last March, it took the IRS about two weeks to process the payments. In round two, in December, it took just a few days once the bill was signed into law.
5. What if I’m still waiting for my round one or round two payment?
The IRS has added an extra line -- line 30, “Recovery rebate credit” -- to this year’s individual tax return Form 1040 to claim any missing payments. If you are missing some or all of those payments you can claim the additional amount and it will be added onto your tax refund.
6. Are there any other tax changes in this stimulus bill?
The legislation expands the child tax credit for one year to $3,600 for children under 6, and to $3,000 for children ages 6 to 17. The current credit is $2,000 per child. The IRS will start sending the credit in advance to households in the form of monthly payments. Also, senators were discussing making up to $10,200 of unemployment benefits tax-free, a change that would save many households from facing surprise tax bills on jobless benefits.
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March 06, 2021 at 06:23AM
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Analysis | Who Qualifies for a Third Stimulus Check? Here's How It Will Work This Time - Washington Post
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