The Senate has passed the American Rescue Plan Act of 2021, which includes a new round of direct stimulus payments to individuals. This episode of the Tax Insights Podcast provides an in-depth look at what you can expect from the third round of recovery rebates.
When Will People Get the Payments?
- The legislation still needs to be passed by the House and then signed by the President. It seems like this is pretty likely at this point.
- Looking at the last two stimulus checks, they came within two weeks for the first one and within days for the second one, so I think they may come before the end of the month.
We have been talking about $1,400 each, is this still the case?
- That appears to be the number.
- Unlike the 1st and 2nd round, this payment will go to adults, children, and adult children as long they are dependents. The payment will also go to other adult dependents, many of which we talked about on last week’s show. Shameless plug to go to our website, apple podcasts, or YouTube if you missed it.
Doing the math, a couple with two children can get $5,600?
- Yes, as long as they meet the income requirements.
What’s different than the two other rounds?
- Single phases out from $75k to $80k
- Head of household phases out from $112,500 to $120k
- Married couples phase out from $150k to 160k
This phase-out is lower than the other two rounds
- The other rounds had a longer phase-out range.
- This brings me to a planning point. You may not want to file your return right away.
- Just like the 1st stimulus bill, the payment will be based on your current year (2020 in this case) or 2019 return (if your 2020 has not been filed yet).
What is the reason to wait to file your 2020 return?
- Let’s use married couples for example. I mentioned earlier that the 3rd round phases out at $160k of adjusted gross income. If you expect your 2020 income to be higher than $160k, but your 2019 income was below this amount, then wait. By waiting, you will get the payment.
This works the opposite way also?
- Yes, if your 2020 income is below $160k and your 2019 income was above, then file your 2020 right away to get the payment.
- But if you don’t file it before the payments come out, you will get another chance to get it once your 2021 return is filed.
Please contact us for further information or ask about recovery rebates or the American Rescue Plan Act of 2021.
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.
