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A third stimulus check of $1,400 – that's what President Joe Biden is calling for in his $1.9 trillion economic stimulus plan. This, when combined with the $600 second-round payments authorized last month, would bring the total post-CARES Act stimulus check relief to $2,000 per eligible person. (The CARES Act, which was enacted in March, provided first-round stimulus payments of $1,200.)
President Biden also wants to expand eligibility for the additional payments that, for the first two stimulus checks, only went to families with dependent children under age 17. Under the president's plan, the additional payments would also go to all dependents, regardless of age. This would include children over 16 years of age, college students age 23 or younger, and elderly parents living with their adult children. Under Biden's plan, Americans who can claim these people as dependents on their tax return would get an additional $1,400 per dependent tacked on to their third stimulus check.
A plan summary also states the third-round payments would also go to "all mixed status households." That presumably means that if one spouse qualifies for a payment but the other one doesn't (e.g., because he or she doesn't have a Social Security number), then the family would still be eligible for payments for qualifying members of the household.
The summary also stated that the Treasury Department would have the "flexibility and resources it needs to deliver stimulus checks to the families that need them most." That includes eligible families that still haven't received $1,200 payments under the CARES Act.
"Targeted" Third Stimulus Checks?
In December, the House of Representatives passed the CASH Act, which also would have provided a third round of $1,400 stimulus checks and expand the additional payment to all dependents. That bill, however, never got a vote in the Senate and died at the end of the previous Congressional term. The main objection for Senate Republicans was that CASH Act stimulus checks would have been sent to wealthy people who didn't need the money. Since then, Sen. Joe Manchin (D-W.Va.) also suggested that he won't support a third round of stimulus checks unless payments are "targeted" and only sent to Americans who actually need them.
For first- and second-round payments, the total amount was reduced for people at certain income levels. Your payments were gradually reduced to zero if you're single, married filing a separate tax return, or a qualifying widow(er) with an adjusted gross income (AGI) above $75,000. If you're married (or a surviving spouse) and file a joint tax return, the amount of your first two stimulus checks dropped if your AGI surpassed $150,000. If you claim the head-of-household filing status on your tax return, your payments were reduced if your AGI topped $112,500. First- and second-round stimulus payments were reduced at a rate of $1 for every $20 over the applicable AGI threshold.
However, there is no indication at this point that the new president wants to adjust the phase-out rules. There are two easy ways to do this. First, the phase-out threshold amounts could be lowered. For instance, instead of having payments for married couples drop if their AGI is over $150,000, have the reduction begin with an AGI exceeding $100,000. The second way is to adjust the phase-out rate. For example, changing the rate to, say, $1 for every $10 over the threshold would reduce payments for people with higher incomes to zero faster.