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President-elect Joe Biden announced a new $1.9 trillion coronavirus relief package that will deliver a third round of direct payments for millions of Americans. This will top off the second stimulus checks, which pay up to $600 per person, with an additional $1,400 payment. Let’s break down what the American Rescue Plan could mean for you – who is eligible for the third stimulus check, how it could be calculated, and how soon you could get it.
This is a developing story. We will continue to update the article as soon as more information becomes available.
If you do not need to spend your stimulus check on immediate needs, consider working with a financial advisor to strategize how best to use or invest this money.
Timeline for the $2,000 Stimulus Checks
December 22, 2020: President-elect Biden calls the $900 billion stimulus package a “down payment” for a bigger stimulus program during his presidency.
January 6, 2021: Democrats split the Senate 50-50 with Republicans after Raphael Warnock and Jon Ossoff win the Georgia runoff election, promising to vote for $2,000 stimulus payments.
January 8, 2021: Senator Joe Manchin says via Twitter that the third stimulus checks “should be targeted to those who need it.” The moderate Democrat could help tip the Senate in favor or against a new stimulus payment. He’s quoted in a previous interview saying that he would oppose a third stimulus check.
January 12, 2021: Republican Senator Marco Rubio calls on President-elect Biden to increase stimulus payments from $600 to $2,000 as a way to unify the government behind the American people. This could help tip the Senate to support a third stimulus check if he votes in favor.
January 14, 2021: President-elect Biden announces details for a new $1.9 trillion COVID-19 relief package that will raise $600 stimulus payments up to $2,000 for millions of Americans.
January 19, 2021: Treasury Secretary nominee Janet Yellen says during her Senate confirmation hearing that it’s critically important to pass a sweeping stimulus package “to help families who are at risk of going hungry or losing the roof over their heads.”
January 20, 2021: Vice President-elect Kamala Harris takes office. As the presiding officer of the Senate, she can now cast a tie-breaking vote for $2,000 stimulus checks in a chamber that is divided 50-50 between Democrats and Republicans.
January 21, 2021: House Speaker Nancy Pelosi says that they will be doing committee work next week to get a COVID-19 bill that includes a third stimulus check ready for the next session of the House on February 1.
How Much Could the Third Stimulus Check Pay?
President-elect Biden announced on January 14 that he is assembling a $1.9 trillion relief package that will boost stimulus payments from $600 to $2,000 for millions of eligible Americans.
This means that if you are currently getting a $600 stimulus check, you may soon be eligible for an additional payment of $1,400, which adds up to a $2,000 stimulus payment.
Assuming that the third relief package follows the same eligibility requirements that were set by Congress for the first two stimulus payments, your third stimulus check will be based on your tax filing status and income level.
How Could the Third Stimulus Check Be Calculated?
The IRS relied on your 2018 and 2019 tax returns to calculate how much you could get for the first and second rounds of stimulus checks.
Congress set limits based on adjusted gross income (AGI) ranges. This means that taxpayers making less than the minimum threshold could get the full stimulus check, while those earning above it will get reduced payments until they are fully phased out at higher incomes.
You can find your AGI on IRS form 1040. This is calculated by subtracting deductions like student loan interest, health savings account payments, and contributions to a traditional IRA from your gross income.
Your eligibility for the third stimulus check will be based on your 2019 taxes (which you filed by July 15, 2020).
Who Could Qualify for the Third Stimulus Check?
Millions of Americans who were eligible for the $600 second stimulus checks could soon qualify for the third round of stimulus payments up to $1,400.
For reference, the IRS used the following AGI limits to determine eligibility:
Single filer checks phased out at AGIs over $75,000.
Married and joint filer checks phased out at AGIs over $150,000.
Head of household checks phased out at AGIs over $112,500.
Note that the IRS reduced second stimulus payments by 5% for the total amount made over the AGI limit. This means that if they apply the same sliding scale to the additional $1,400 checks, your payment will go down by $5 for every $100 over the limit.
Following this calculation, individual taxpayers making over $103,000, and joint filers earning over $206,000 will not get an additional stimulus payment.
Below you can see the third stimulus check broken down by AGI limit for single and joint filers. Use the table to calculate how much they could get:
$1,400 Stimulus Checks for Single and Joint Filers Single AGI Payment Joint AGI Payment $75,000 $1,400 $150,000 $2,800 $80,600 $1,120 $161,200 $2,240 $86,200 $840 $172,400 $1,680 $91,800 $560 $183,600 $1,120 $97,400 $280 $194,800 $560 $103,000 and up $0 $206,000 and up $0 Will Eligibility Requirements Change for Dependents?
The second stimulus checks currently provide additional $600 payments for qualifying dependents under the age of 17. So a married couple filing jointly with four children could get up to $3,600. But while there’s no limit on the number of dependents that you can claim, you cannot get the extra $600 stimulus check for children and adult dependents over the age limit, and they do not qualify for a stimulus check of their own either.
This could change if the third stimulus check gets approved without an age requirement for dependents. President-elect Biden’s plan proposes expanding eligibility to “adult dependents who have been left out of previous rounds of relief.” This includes college students over the age of 17, elderly relatives, and adults with disabilities who are claimed as dependents on your tax return.
On December 28, 2020, the House similarly removed the age requirement for adult dependents in the CASH Act, increasing stimulus payments up to $2,000 and changing the definition of eligible dependents from “qualifying children (within the meaning of section 24(c))” to “dependents (as defined in section 152)”. Under this section, the term “dependent” means “qualifying child” or “qualifying relative.”
If the third stimulus check gets approved with this change, then both joint filers and heads of household could get an additional $1,400 payment for each dependent, regardless of age. This means that joint filers could get up to $2,800 as long as they don’t exceed the $150,000 AGI limit, and an additional $1,400 for each qualifying child or relative. And heads of household could get the extra $1,400 per dependent as long as they do not exceed the AGI limit of $112,500.
Below you can compare the current $600 stimulus check with a $1,400 payment for Heads of Household with one dependent. Use the table to calculate how much they could get:
Stimulus Check Comparison for Heads of Household & 1 Dependent AGI Level $600 Stimulus Payment AGI Level $1,400 Stimulus Payment $112,500 $1,200 $112,500 $2,800 $116,500 $1,000 $122,000 $2,325 $120,500 $800 $131,500 $1,850 $127,500 $600 $141,000 $1,375 $132,500 $400 $150,500 $900 $142,500 $200 $160,000 $425 $146,500 and up $0 $168,500 and up $0 Could Mixed-Status Families Still Get Stimulus Checks?
President-elect Biden’s plan maintains eligibility for mixed-status households, which include family members with different citizenship or immigration statuses. A common example of a mixed-status family can be made up of undocumented parents and U.S.-born children.
Under the March 2020 CARES Act, if a U.S. citizen and a noncitizen spouse filed their taxes jointly, they would not be eligible to claim the first stimulus check. However, when the $900 billion COVID-19 relief package was signed into law in December 2020, joint filers with one undocumented spouse became eligible for the second stimulus check, as well as additional payments for child dependents.
This bipartisan compromise also extended eligibility retroactively for the first stimulus checks, allowing mixed-status families to claim $1,200 for joint tax filers and an additional $500 payment for each qualifying child.
You should note that “nonresident aliens” in 2020 are not eligible for the first and second stimulus checks. Currently, the IRS says that “qualifying resident aliens” with valid Social Security numbers for employment are eligible for stimulus payments as long as they have not been claimed by another taxpayer as a dependent.
How Soon Could You Get the Third Stimulus Check?
The Senate is now evenly divided 50-50 between Republicans and Democrats. Republicans lost control after Senators-elect Raphael Warnock and Jon Ossoff won a January 6 runoff election in Georgia. Vice President-elect Harris could cast a tie-breaking vote after she takes office on January 20.
Democrats could use a special process tool known as budget reconciliation to fast-track third stimulus check legislation in the Senate. This means that bills could be passed with a simple majority.
While Democrats have voted in favor of $2,000 stimulus checks, it’s still unclear whether the third stimulus check will have enough support to get approved. Moderate Democrats and Republicans could oppose another stimulus payment because of the growing costs of the relief packages.
Moderate Democrat Senator Manchin (D-WV) can play an influential role in tipping the evenly divided Senate in favor or against another stimulus check. He Tweeted on January 8: “If the next round of stimulus checks goes out they should be targeted to those who need it.” The lawmaker was also previously quoted in an interview saying that he would oppose a third round of stimulus payments.
Some Republican Senators, however, support a $2,000 stimulus check. Senator Marco Rubio (R-FL) wrote to President-elect Biden on January 12 calling for the increase to unify the government and the American people.
A stand-alone bill like the CASH Act might be the fastest path towards getting a third stimulus check approved. Voting on a much larger stimulus package that includes money for vaccines, enhanced unemployment benefits, and other relief measures could face more opposition.
Treasury Secretary nominee Yellen called for a sweeping stimulus package to protect families from going hungry and losing their homes. “Neither the President-elect nor I proposed this relief package without an appreciation for the country’s debt burden,” she said on January 19 during her Senate confirmation hearing.
President-elect Biden has stressed the urgency of getting much-anticipated relief to millions of Americans as one of his presidency’s first priorities, along with mass vaccination. The rescue plan will likely need bipartisan support from Congress to get approved into law.
House Speaker Nancy Pelosi (D-CA) said on January 21 that they will expedite the legislative process for a COVID-19 bill, which includes a third round of stimulus checks, by doing committee work to get a bill report ready for a House vote on the first week of February.
How Could a Third Stimulus Check Bill Get Passed into Law?
The legislative process for passing a third stimulus check bill could take weeks or longer. Below we have broken down the general steps for passing a bill into law:
A member of the House of Representatives or the Senate will have to draft a new spending bill.
Either a House Representative or a Senator will need to introduce the bill as a sponsor in their respective chamber.
The bill will be reviewed carefully by different committees to determine its possibility of getting passed through Congress. A committee could delay the bill by calling for a hearing to better understand the impact of a third stimulus check. The bill could die if a committee does not act on it.
The bill could be sent to a subcommittee for a deeper study and additional hearings. This could lead to more changes, which have to be voted on before heading back to the full committee.
The committee meets again to mark up the bill with a final round of changes and amendments. They must then vote to report the bill to the chamber of Congress that sponsored it. If they vote against reporting the legislation, the bill will die.
Either the House or Senate where the bill was reported will debate and then vote to approve or defeat it.
After the bill passes in either the House or Senate, it will go to the other chamber to follow the same steps for a vote. If additional changes are made, Congress could set up a conference committee to reconcile differences between both versions of the bill, and create a report that has to be approved by House and Senate votes. If this committee cannot reach an agreement, the bill will die.
The president then gets the reconciled bill and has 10 days to sign the legislation into law. In the case of a veto, Congress will need to get a two-thirds vote in both chambers to override it into law.
How Could Third Stimulus Payments Be Sent and Tracked?
The IRS will make payments via direct deposit, paper check and prepaid debit cards.
For a comparison, direct deposits for second stimulus checks started going out on December 29, 2020. Paper checks followed one day later, and the IRS said that it is sending out approximately 8 million prepaid debit cards loaded with stimulus payments.
The IRS was mandated by Congress to deliver the $600 stimulus checks in record time – less than three weeks – by January 15. Eligible taxpayers who do not get payment by the cutoff date, will have to claim their stimulus as a recovery rebate credit on their 2020 tax return, which is due by April 15.
You will be able to follow up on the status of all your stimulus payments on the IRS’s “Get My Payment” portal.
Note that if you collect Social Security retirement benefits, Social Security survivor benefits, Social Security disability benefits, Supplemental Security Income (SSI), Railroad Retirement benefits and VA benefits, you could automatically get a possible third stimulus check via direct deposit as long as you have your bank account on file with the IRS.
Eligible recipients who could not file a tax return, might still be able to claim stimulus payments as a recovery rebate credit.
Qualifying taxpayers who did not get the full amount of their stimulus payment could also use the credit to increase their tax refund or lower their tax bill.
How Are Americans Using Stimulus Checks?
The U.S. Census Bureau said in a 2020 study that the majority of recipients who got the first stimulus check spent their payment on household expenses. Adults with incomes between $75,000 and $99,999 told the Census that they would most likely pay off debt or add to their savings. While adults making less than $25,000 said they would use their stimulus to pay for expenses.
For those households that spent their first stimulus checks, the study says that:
80% used it on food
77.9% used it on rent, mortgage and/or utilities (these include gas, electricity, cable, internet and cellphone)
58.2% used it on household supplies and personal care products
20.5% used it on clothing
8.1% used it on household goods (these include TVs, electronics, furniture, appliances and recreational goods like fitness equipment, toys and games)
Another study pointed out that recipients are less likely to spend their stimulus checks on the economy. The Federal Reserve Bank of New York said that only 29% of households surveyed spent their first stimulus checks by June 2020, while 36% saved them, and 35% paid down debt. This trend could indicate that recipients of second and third stimulus checks may be even more inclined to save the money and pay down debt.
For additional context, the Bureau of Economic Analysis said that consumer spending had increased $737.7 billion (5.6%) in June 2020. But by November 2020, it had decreased $63.3 billion (0.4%). By comparison, personal saving was $3.37 trillion in June and the personal saving rate was 19%. But by November personal saving had gone down to $2.22 trillion and the rate was 12.9%.
President-elect Joe Biden announced a new $1.9 trillion coronavirus relief package that includes a third round of direct payments for millions of Americans. This will top off the $600 second stimulus checks with an additional $1,400 payment. If you were eligible for the second stimulus payment, you could qualify for the third round of payments. However, you should note that Congress still needs to vote on the new relief package before it can be signed into law.
It’s important to keep up with the latest developments so you can know what type of aid you could qualify for. We will continue to update this article as soon as new information becomes available. You can also find other relief programs at the federal government help center and our list of coronavirus relief programs by state.
Tips for Individuals During the Coronavirus Pandemic
If you don’t need to use your stimulus check for anything urgent, consider investing or saving the money. A financial advisor can help you get started if you need help managing your money or investments. SmartAsset’s free tool can match you with financial advisors in your area in just five minutes. Get started now.
If you are struggling to keep up with loan or credit card payments, you can take steps to protect your credit score and speak with your bank directly to see whether you can defer loan payments or waive certain fees.
If you can afford it, investing in index funds during a recession is a safe option. But if you’re looking for a slightly more aggressive approach, check out some free investment classes to learn more.
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