Third stimulus check: Here’s what to expect
Some of your questions about the latest round of stimulus checks answered.
Photo by Michele Orallo on Unsplash
With many people still in need of help, the government looks to supplement income with a new stimulus package and jump-start the economy. As the IRS prepares to send out checks, many Americans continue to have questions about what they can expect from this third round. Here we’ll address some of these questions about the stimulus portion of this new relief bill.
How much will my stimulus check be?
Most Americans, including dependents, will receive direct payments up to $1,400 per person through this bill. This third round of stimulus checks greatly expands the eligibility of dependents from the previous two rounds, allowing adult dependents such as students, parents, or those with disabilities to qualify for $1,400 for the household.
These payments also phase out at a lower rate than previously, at $75,000 for individuals with a cap at $80,000. For joint filers, the limits are doubled. Calculations are based on the most recent tax return filed with the IRS.
Why do I need to enter the amount of stimulus I received to date when filing my 2020 tax return?
Depending on the amounts you previously received, you may qualify for an additional amount on your 2020 tax return. The previous two stimulus checks were $1,200 and $600 per taxpayer, respectively, and were determined based on the income reported on either your 2018 or 2019 tax returns. Both of these stimulus amounts will be recalculated using your 2020 adjusted gross income when you file your tax return through the recovery rebate credit.
If your income increased in 2020, you will not be required to repay previously received stimulus amounts. However, if your income decreased and you did not previously receive the maximum stimulus amount, you could qualify for an additional recovery rebate credit on your 2020 tax return.
Should I hurry to file my tax return or wait?
As with many tax questions, the answer depends on the individual and how your income has changed between 2019 and 2020. We know that the previous two stimulus checks will be recalculated using the amounts reported on your 2020 tax return.
If your income in 2020 is the same or lower than what was reported in 2019 and you received a reduced stimulus check for either of the first two rounds (or didn’t receive one at all), it would be beneficial to file quickly. This will allow you to collect any unpaid stimulus amounts or receive the recovery rebate credit if you didn’t previously receive the maximum amount of the stimulus checks.
However, if your income increased in 2020, it might behoove you to wait to file your tax return, as the amount is calculated based on the most recent tax return on record. Waiting to file your 2020 tax return could qualify you for a stimulus amount based on your 2019 tax return.
How will I receive my stimulus check?
During the first round of stimulus checks, the IRS offered an option to add direct deposit information. They did not provide this option for the second round and will not for the third. This would mean that however you received your second stimulus check (direct deposit or paper check) will most likely be how you will receive the third.
We would encourage everyone to keep track of the payments they receive. The IRS expects to begin sending out checks in late March. With many IRS employees still working from home and still processing 2019 returns, we strongly recommend filing electronically, as this will greatly increase the chances of your return being processed timely.
