Will there be a third round of stimulus checks? If so, when will they arrive? How much will they be? Will I get one? These are just a few of the many questions people are asking about third stimulus checks. Why so many questions? It's partly because there have been so many different third stimulus check proposals coming out of Washington, D.C., lately. Some proposals called for $2,000 checks, while others were for $1,400 payments. Under some plans, everyone who received a first- or second-round stimulus check would also get a third one. But other plans are more "targeted" and would stiff some people who received an earlier payment.
Fortunately, a single third stimulus check plan is now moving its way through Congress. It was already approved by the House Ways and Means Committee and will be included in the House budget reconciliation bill – the legislation being used by Congressional Democrats to push through President Biden's COVID-relief package. The reconciliation bill is expected to be passed by the House before the end of February. And the overall goal is for the House and Senate to agree on a final bill before March 14.
There could be changes to the current stimulus check plan before a final reconciliation bill is signed, sealed, and delivered. But the general framework is likely to remain the same. That means we can start providing probable answers to some of the questions Americans have about the next round of stimulus checks. We're also able to offer a handy Third Stimulus Check Calculator that lets you see how much money you would get if the current proposal is ultimately enacted (everyone's payment will be different). Having this information in advance can help you prepare your finances for the future if this current plan makes it to the finish line with little or no changes.
[Stay on top of all the new stimulus bill developments – Sign up for the Kiplinger Today E-Newsletter. It's FREE!]
When Will Third Stimulus Checks Arrive?
Congressional Democrats have vowed to pass a new COVID-relief package before extended unemployment benefits run out on March 14. If they meet that goal, it will still take the IRS some time before it's able to begin sending out payments.
The tax agency started delivering second-round stimulus checks less than a week after they were authorized, but that was in December. The IRS has more on its plate now. Tax return filing season began on February 12, so the IRS is busy processing tax returns – which could very well slow down the processing of stimulus checks. As a result, assuming a third stimulus check plan is enacted by mid-March, don't expect the first round of payments until later in the month – perhaps even early April if there are any problems.
How Much Money Will People Get?
The current proposal being considered in Congress calls for a base amount of $1,400 per eligible person ($2,800 for married couples filing a joint return), plus an additional $1,400 for each dependent in your family. However, as with the two previous stimulus payments, the total amount would be reduced – potentially to zero – depending on the filing status used and the adjusted gross income (AGI) reported on your most recent tax return.
Under the current proposal, stimulus checks would not be reduced for single Americans earning up to $75,000, head-of-household filers making up to $112,500, and married couples with a combined income up to $150,000. As with previous stimulus checks, they would get a full payment. But for singles with an AGI above $75,000, stimulus checks would be gradually phased-out until they reach zero for anyone making $100,000 or more. For head-of-household filers, the phaseout range would be from $112,500 to $150,000. For married couples filing a joint return, the phase-out range would be $150,000 to $200,000. Plus, the phase-out range's ceiling would be a hard cap that applies to all people, regardless of how many dependents they have. As a result, third stimulus checks would be reduced to zero for all taxpayers at or above the $100,000, $150,000, and $200,000 AGI levels (depending on your filing status).
Again, we have a handy Third Stimulus Check Calculator that will spit out a customized estimated payment amount for you. All you have to do is answer three easy questions.
How Will Third Stimulus Checks be Calculated?
Under the current proposal being considered in Congress, eligibility for and the amount of a third stimulus check would be based on either your 2019 or 2020 return. If your 2020 tax return isn't filed and processed by the IRS by the time the tax agency starts processing your third stimulus payment, the IRS would use information from your 2019 tax return. If your 2020 return is already filed and processed when the IRS is ready to send your payment, then your stimulus check eligibility and amount would be based on information from your 2020 return. If your 2020 return is filed and/or processed after the IRS sends you a stimulus check, but before July 15, 2021 (or September 1 if the April 15 filing deadline is pushed back), the IRS would send you a second payment for the difference between what your payment should have been if based on your 2020 return and the payment actually sent based on your 2019 return.
As with first-round stimulus payments, this would create some opportunities to "game" the system if you don't file your 2020 return early. For instance, if you'll get a larger check based on your 2020 tax return, than you might be able to quickly file your 2020 return electronically and have your third stimulus check based on that return. If you'll get a bigger check if it's based on your 2019 return, then just wait until after your payment is sent to file your 2020 return. For more on this, see How Filing Your Tax Return Early (or Late) Could Boost Your Third Stimulus Check.
How Will Third Stimulus Check Payments Be Made?
The IRS would send payments electronically to as many people as possible. That's the fastest and easiest way to deliver the money. The plan under consideration says that the IRS can directly deposit third-round stimulus payments to any bank account used to receive a recent tax refund or make a tax payment. The IRS could also make a third stimulus payment to a Direct Express debit card account, a U.S. Debit Card account, or other existing Treasury-sponsored account. Otherwise, you'll get a paper check or a prepaid debit card in the mail.
If you already have a prepaid debit card from the IRS (e.g., for a first- or second-round stimulus check), you would get a new card if the IRS decides to send your third stimulus payment to you in that form. (But just because you received a debit card for an earlier stimulus payment doesn't mean you'll automatically get one for the third payment.)
Who Won't Get a Third Stimulus Check?
In addition to people with higher incomes, nonresident aliens and anyone who can be claimed as a dependent on someone else's tax return would not get a third stimulus check under the plan currently being considered by Congress.
Generally, a nonresident alien is not a U.S. citizen, doesn't have a green card, and isn't physically present in the U.S. for the required amount of time. For more information on nonresident alien status, see IRS Publication 519.
In most cases, you would also need to a Social Security number to receive a third stimulus check. Generally, your spouse and any dependent you're claiming to get the additional $1,400 would also need a social security number. An individual taxpayer identification number (ITIN) wouldn't count.
There would be a few exceptions to this rule:
- An adopted child with an adoption taxpayer identification number (ATIN) would still qualify for the extra payment for dependents if he or she doesn't have a Social Security number;
- For married members of the U.S. armed forces, only one spouse would need to have a Social Security number; and
- If your spouse doesn't have a Social Security number, you could still receive a third stimulus check, plus any extra money for qualifying dependents, if you have a Social Security number.
Will All Dependents Qualify for the Extra $1,400 Payment?
One important difference between the current third stimulus check proposal and the previous stimulus payments is that all dependents would qualify for the extra $1,400 payment under the current plan – regardless of their age. (Note: The person claiming the dependent on his or her tax return would actually get the additional $1,400 – it would not go to the dependent, since dependents are not eligible for stimulus payments.)
For both the first- and second-round stimulus payments, families received an additional $500 or $600, respectively, only for dependent children age 16 or younger. Families with older children, including college students age 23 or younger, or with elderly parents living with them, didn't get the bonus money added to their earlier stimulus payments. That would change under the third stimulus check plan that's being considered by Congress right now.
Will Dead People Get a Third Stimulus Check?
Under the current proposal, anyone who died before January 1, 2021, would not be eligible for a third stimulus check. They would be treated as if they don't have a Social Security number.
If a person who died before 2021 was married and a member of the U.S. military, the surviving spouse could still receive a third stimulus check even if he or she doesn't have a Social Security number.
However, the extra $1,400 per dependent won't be available if a single parent died before 2021 or, in the case of a joint return, both parents died before then.
Will Third Stimulus Checks Be Taken to Pay Child Support or Other Debts?
The proposal currently before Congress would protect your third stimulus check from reduction or offset to pay back taxes, child support, or other debts owed to the federal or a state government. (If you owed child support, the IRS could use first-round stimulus check money to pay arrears.)
However, at this point, the plan doesn't include additional protections that were included in the legislation authorizing the second round of stimulus checks. For example, second-round stimulus checks weren't subject to garnishment by creditors or debt collectors. They couldn't be lost in bankruptcy proceedings, either. The IRS also had to encode direct deposit payments so that banks knew they couldn't be garnished.
This is an area where it's easy to envision changes being made to the current plan to add more protections before a final reconciliation bill is adopted.
Will Third Stimulus Checks Be Taxed?
As with the first two stimulus payments, your third stimulus check under the current proposal would be an advance payment of the recovery rebate tax credit for the 2021 tax year. As such, it wouldn't be included in your taxable income.
You also wouldn't be required to repay any stimulus check payments when filing your 2021 tax return — even if your third stimulus check is greater than your 2021 credit. If your third stimulus check is less than your 2021 credit, you would get the difference when you file your 2021 return next year.
"current" - Google News
February 18, 2021 at 09:43PM
https://ift.tt/3s6ALxy
Third Stimulus Check Update: The Current Plan for $1,400 Payments - Kiplinger's Personal Finance
"current" - Google News
https://ift.tt/3b2HZto
https://ift.tt/3c3RoCk
Bagikan Berita Ini
0 Response to "Third Stimulus Check Update: The Current Plan for $1,400 Payments - Kiplinger's Personal Finance"
Post a Comment