Stimulus Package Law: What's The Holdup On Checks?

The third stimulus package, also known as the American Rescue Plan, was signed into law by President Joe Biden in March 2021. The $1.9 trillion Covid-19 relief package included a third round of stimulus checks for eligible Americans, worth up to $1,400 per adult and dependent. The bill also provided funding for schools, public health, and state and local governments, among other initiatives. The House Ways and Means Committee approved the stimulus checks, which were then debated in the House Budget Committee and eventually passed in the House and the Senate.

The American Rescue Plan

The plan included a third stimulus check for $1,400, expanded and extended unemployment insurance, and billions in funding for schools, public health, and state and local government aid. The stimulus checks were directed towards individuals earning less than $75,000 annually and married couples earning less than $150,000, with additional payments of $1,400 for each dependent, regardless of age.

The bill faced opposition from Republicans and underwent modifications during its passage through Congress. The final version of the bill did not include a proposed increase in the minimum wage to $15 an hour, which was opposed by some Democratic senators. Despite the challenges, the American Rescue Plan was passed with support from Democrats and marked a significant step in providing relief to Americans impacted by the pandemic.

The Treasury Department began distributing the third stimulus checks soon after the bill became law, aiming to provide financial assistance to eligible individuals as they continued to navigate the economic challenges posed by the Covid-19 pandemic.

Who is eligible for the third stimulus check?

Eligibility for the third stimulus check is largely based on income and tax filing status. Individuals who make less than $75,000 in their adjusted gross income (AGI) and married filers who earn a combined $150,000 would be eligible for the full $1,400 or $2,800 payments, respectively. For example, a married couple earning $140,000 jointly with one child and one adult dependent would receive $5,600 - $1,400 multiplied by four.

The eligibility for this round of stimulus checks has been tightened, meaning that many high-earning taxpayers who were eligible for previous stimulus checks will now be excluded from receiving $1,400. The approved bill narrows income eligibility to exclude individuals earning over $80,000 and couples making over $160,000. The bill phases out:

• Singles at AGIs $75,000 and $80,000
• Heads of household at AGIs between $112,500 and $120,000
• Couples at AGIs between $150,000 and $160,000

If you are claimed as a dependent on someone else's tax return, you won't receive a stimulus check. That means no payments to children living at home who are 17 or 18 years old, or to college students who are 23 or younger at the end of the year and don't pay at least half of their own expenses.

However, if you're a dependent, the person claiming you as a dependent on their tax return will get an extra $1,400 added to their third stimulus check.

Unlike the first two stimulus checks, all dependents qualify for the third stimulus check, regardless of age. This means that for each child or adult dependent, you can claim an additional $1,400.

To be eligible for the third stimulus check, you must be a U.S. citizen, permanent resident, or qualifying resident alien. You must also have a Social Security number.

How much will the third stimulus check pay?

The third stimulus check will pay up to $1,400 per adult and $1,400 per dependent. A qualifying married couple with two children, for example, could receive up to $5,600.

The eligibility criteria for this round of stimulus checks is based on income. Individuals who make less than $75,000 in adjusted gross income (AGI) and married couples filing jointly who earn a combined $150,000 would be eligible for the full $1,400 or $2,800 payments, respectively. The eligibility threshold for this round of stimulus checks has been tightened, meaning that many high-earning taxpayers who were eligible for previous stimulus checks will now be excluded from receiving $1,400. The bill narrows income eligibility to exclude individuals earning over $80,000 and couples making over $160,000.

The stimulus bill mandates that the treasury rely on 2019 and 2020 tax returns to calculate how much individuals could receive for the third round of stimulus checks. Taxpayers who make less than the minimum threshold could get the full stimulus check, while those earning above it will receive reduced payments until they are fully phased out at higher incomes.

The new stimulus bill also expands eligibility to adult dependents, including college students, elderly relatives, and disabled adults. Families should keep in mind that the targeted lower-income ranges will exclude them if they earn over $160,000. With the new stimulus plan, both joint filers and heads of household will get an additional $1,400 payment for each dependent, regardless of age.

How soon could you get the third stimulus check?

The timing of the third stimulus check will depend on when the bill becomes law and how the IRS chooses to distribute the money.

President Biden's $1.9 trillion stimulus package proposal may not become a workable bill until late February or early March. However, a standalone bill including just a third stimulus check and funding for COVID-19 vaccine distribution could be voted on in the House of Representatives sooner.

Once the bill is signed into law, the Treasury Department will start distributing the third stimulus checks within one to two weeks. For reference, the second stimulus checks started going out to taxpayers on December 29, 2020, two days after the COVID-19 stimulus package was signed into law.

The bill is on track to become law by March 15, which means that the first batch of payments will begin to go out before April 1. Tens of millions of direct deposit recipients could receive a check before April 1, followed by staggered start dates for physical checks and EIP cards.

The IRS will make payments via direct deposit, paper check, and prepaid debit cards.

If you collect Social Security benefits, you could automatically get a third stimulus check via direct deposit as long as you have your bank account on file with the IRS.

How will the third stimulus check be calculated?

The third stimulus check will be calculated based on tax returns from 2019 and 2020. The stimulus bill sets out limits based on adjusted gross income (AGI) ranges. This means that taxpayers who earn less than the minimum threshold will receive the full stimulus check, while those earning above it will receive reduced payments until they are phased out at higher incomes.

For single filers, the full $1,400 stimulus payment will go to those whose AGI does not exceed $75,000. The amount will then begin to decrease, phasing out completely at $80,000.

Married couples who file jointly and whose AGIs do not exceed $150,000 are eligible for the full $2,800 stimulus payment. This amount will also begin to decrease, phasing out completely at $160,000.

Heads of household whose AGI does not exceed $112,500 are eligible for the full $1,400 stimulus payment. This amount will also decrease, phasing out completely at $120,000.

The stimulus check will be calculated by subtracting deductions like student loan interest, health savings account payments, and contributions to a traditional IRA from your gross income.

The third stimulus check is part of President Biden's $1.9 trillion coronavirus relief package, which was passed by the House Ways and Means Committee in February 2021. The bill includes $1,400 stimulus checks, monthly payments for families, and an increase in the federal unemployment boost to $400 a week.

Frequently asked questions