Congress takes another step towards another round of direct stimulus payments
On Monday, the House Budget Committee approved President Joe Biden’s $ 1.9 trillion COVID-19 relief bill, bringing Americans one step closer to a third round of direct stimulus payments.
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What happens next
The President’s Bill – known as the American Rescue Plan (ARP) – will then go to the House Rules Committee. This committee will determine which proposals to keep in the bill before sending it to the room for debate and vote. For example, most House Republicans have made it clear that they will fight Biden’s $ 15 minimum wage proposal, which means it may need to be put on hold for now. Despite the work to be done, House Speaker Nancy Pelosi is confident that the House of Representatives will hold a final vote by Friday, February 26. Once the bill is approved by the House, it will go to the Senate. Senate Majority Leader Chuck Schumer promises to pass the bill by March 14, when the enhanced unemployment aid expires.
How much you can expect
People with Adjusted Gross Income (AGI) of less than $ 75,000, heads of households with an RGA of less than $ 112,500, and couples with an RGA of less than $ 150,000 can expect $ 1,400 per eligible beneficiary, including dependents. The first set of payments included $ 500 for children under 17 and the second set of payments included $ 600 for children under 17, but this bill proposes that families receive $ 1,400 for each person dependent, including university-age students.
For example, a married couple earning $ 85,000 with three dependents can anticipate a direct payment of $ 7,000 (5 x $ 1,400 = $ 7,000).
When issuing the third set of checks, the eligibility should be slightly different than the first two sets. Although the income limits for full payments of $ 1,400 remain the same, the income at which partial payments are fully waived has been lowered. Singles with an AGI of up to $ 100,000, heads of households with an AGI of up to $ 150,000, and couples earning up to $ 200,000 will be eligible for partial stimulus payments. No direct stimulus funds will be sent to anyone above these income thresholds.
What’s the timeline?
After the first two stimulus packages were signed, the IRS was able to get most of the stimulus payments and put them into bank accounts in less than three weeks. Even though we’re in the middle of tax season, the IRS says they’re ready to make another quick turnaround. If Schumer is right and the Senate moves the bill to the Oval Office by March 14, you can expect your payment before the first week of April.
What to do if you don’t receive a check
If you’ve moved or changed banks and the IRS can’t locate you, have your 2020 tax return filed as soon as possible so the IRS has your new address and new banking information. If you qualify for stimulus checks that you did not receive, line 30 of Form 1040 or 1040SR of your 2020 income tax return allows you to claim a recovery refund credit. Although you are not normally required to file a tax return, the IRS suggests that you do so this year if you are eligible for stimulus funds.
The credit works like this: If you need to repay your 2020 taxes, the amount of the missed direct stimulus payment (s) will be added to your refund total. For example, if you owe $ 1,500 but missed payments of $ 1,200 and $ 600, $ 1,800 will be added to your refund for a total of $ 3,300 ($ 1,500 + $ 1,800 = $ 3,300 ).
If you owe money when you file your 2020 tax return, the IRS will keep the recovery refund credit and use it to reduce the amount owed. Let’s say you owe $ 3,000, but your credit is $ 1,800. The IRS would apply the $ 1,800 to your tax debt, leaving you with a balance owing of $ 1,200 ($ 3,000 – $ 1,800 = $ 1,200).
It has been a difficult 12 months. In addition to half a million COVID-19-related deaths, millions of Americans have faced job losses, concerns about how they will pay for their housing, and food insecurity. Ideally, the next round of stimulus checks will help families balance their finances until things improve. In the meantime, if you’ve been hit hard by COVID-19, visit our Coronavirus Hardship Loan page to learn more about your options.