Things are looking hopeful as the world hits the one-year mark on a massive pandemic. But the U.S. isn’t out of the woods just yet. There are still more than 10 million people out of work, and many businesses have been forced to close.
It’s a great time for a third stimulus check. At least that’s what some lawmakers think, including the President. It’s still uncertain what will happen, but as of Feb. 15, pieces of the bill are making their way through various House committees. The House could vote on the bill as early as the week of Feb. 22.
Before you get excited, though, this stimulus package may have a lower income limit. Here’s what you need to know about a third stimulus check.
What will the payment be?
The first stimulus payment, issued in April 2020, provided $1,200 to each qualifying individual. There was a second, lower, payment, approved in Dec. 2020 for $600. But before the second payout was fully distributed, the federal government was already discussing a third payment that was more in line with the first.
Although the figure being widely discussed is $1,400, it’s still not set in stone. Congress could whittle that amount down before making a final approval. President Biden’s proposal is designed to bring the total amount of this year’s checks to $2,000 – $1,400 to add to the $600 Americans recently received.
Who will qualify for a payment?
This is where things get a little sticky. Legislators are currently discussing whether to lower the income ceiling on the third round of payments. The first and second payments weren’t available to those who made more than $87,000, or $174,000 for couples. Those making between $75,000 and $87,000, or $150,000-$174,000 for couples, received a reduced amount.
While discussions are still in progress, as it stands now, the Republican proposal lowers the ceiling to $50,000, or $100,000 for couples. Only those making less than $40,000, or $80,000 for couples, would get the full amount. Biden’s proposal keeps the original thresholds. The Democrats rejected that income limit, keeping it at $75,000 before the $1,400 starts to phase out.
If you’re on the borderline with either of those income thresholds, keep an eye on updates to see if you’re eligible.
When to expect payment
Eager to know when you can expect the money? You aren’t alone. But first, Congress will have to pass a bill approving the third stimulus check.
Previous forecasts had a March 14th date for a third check. Some lawmakers are optimistic that this date will happen. But first, it has to make its way through the House and the Senate.
If the path through Congress goes smoothly, it would only be a matter of days before the payments begin arriving in bank accounts. The first and second stimulus payments had a lightning-fast turnaround, with a big chunk of the deposits received in a couple of weeks.
Another issue relates to deadlines. The second stimulus check had a deadline of Jan. 15th, which was a fairly tight turnaround time. Those who didn’t receive the payment by then were instructed to claim the missing stimulus payment as a tax credit. But the tight deadline was likely designed to get the work out of the way before tax season started.
That brings up the subject of timing. The IRS handles processing stimulus payments, and the agency is in the heart of tax season. In 2020, the tax deadline was extended, but that isn’t the case in 2021. That makes March and April a tough time for the IRS to be taking on a big project.
How do I get my third stimulus payment?
As before, stimulus payments will be deposited in your account. If you’ve already set that up with the IRS, you’re all set. The IRS will use the information that it already has on you. This includes previous tax refunds you’ve had directly deposited in your bank account in addition to the prior stimulus payments.
If you haven’t set up direct deposit with the IRS, now’s a great time to take care of that. When you file this year’s taxes, choose direct deposit as the payment method for your refund. This will ensure any future stimulus payments will get to you as quickly and reliably as possible.
What if you don’t have a bank account? As with your previous payments, you’ll get a paper check in the mail. This process takes longer, though, so it’s to your benefit to set up a bank account if you can.
Should you wait to file your 2020 taxes before a stimulus bill is passed?
The previous stimulus checks used your 2018 and 2019 tax returns to calculate whether you qualified for the stimulus. With the first check, if you hadn’t yet filed, the IRS went back to your 2018 taxes to get your adjusted gross income. By the second check, the filing deadline had long passed, so the IRS used your 2019 tax return.
That brings a very important question. If your income puts you near a possible cutoff, should you go ahead and file your 2020 taxes or wait? If you think you might exceed the income threshold in 2020 when you didn’t in 2019, some tax preparers are saying to wait. However, waiting will delay your refund. It can’t hurt to calculate your adjusted gross income for 2020 and weigh the risk of filing early versus waiting until a bill has made it through both the House and Senate.
In the meantime, there are a couple of things you can do to make the wait less painful. If you run a business, you can sign up for a BlueVine account in a matter of minutes. BlueVine offers services like invoice factoring that are designed to help bridge the gap between client payments. You’ll also get access to a revolving line of credit that will help you now and in the future.
Another option is to use a budgeting app like MoneyPatrol to see where you can make a few cutbacks. Just connect your banking accounts and the app will take it from there, monitoring your spending and giving tips on where you can squeeze out some more money.
What if I’m still waiting on my second payment?
Forget the third stimulus check. What if you’re still waiting for the second one to hit your bank account? (Or arrive in your mailbox?)
The first thing to check, if your payment hasn’t arrived yet, is whether your banking account information has changed since the last time the IRS paid you. If your routing number and account number aren’t the same, the IRS would have received the payment back as rejected. There wasn’t enough time to put those payments through a second time before the deadline.
If you use a tax preparation service that lets you get your refund early, your payment may have hit another snag. The IRS erroneously issued payments to the temporary accounts these services set up. When you file your taxes, if you agree to let the tax preparer take your fee out of your refund, this temporary account is out there and it could be holding your refund.
Whatever the reason, if you still don’t have either of the first two stimulus checks, simply log it as a tax credit when you file your taxes. If you use tax preparation software, it should guide you through the process. If not, see the instructions for Form 1040 and Form 1040-SR.
The news on a third stimulus check can change from one day to the next, but currently, it looks promising. In addition to calculating your adjusted gross income for 2020, you may also want to make sure the IRS has updated information on you. If you’re still set up to get a paper check, filing your taxes early and providing direct deposit information could speed up the process of getting your third payment.