Stimulus check formula: Your $1,400 check amount could be different now

[ad_1]

030-cash-money-stimulus-checks-bill-passed-congress-1400-dollars-payment-target-supplement-bullseye-2021-biden  Stimulus check formula: Your $1,400 check amount could be different now 030 cash money stimulus checks bill passed congress 1400 dollars payment target supplement bullseye 2021 biden

The stimulus check formula determining how much money you get has changed for a third payment.


Sarah Tew/CNET

The $1.9 trillion relief package is in the Senate’s court this week, and the upper chamber right away started making changes ranging adjusting unemployment benefits to lowering the income limit on who might qualify for the third stimulus check. President Joe Biden supports the new targeted income limit that would disqualify up to 16 million people, The Hill reported. This alteration could be the final factor the IRS uses to determine the size of your next payment — which is much different from the first two payments. Will you still be eligible for the full $1,400 payment — or perhaps more? Or will it qualify you for much less or no money at all?

As soon as Congress reaches an agreement on the stimulus bill and Biden signs it into law, the IRS will need to work on adjusting its calculations for a more accurate formula. Certain stimulus income limits and who counts as a dependent will need to be clearly defined — these will be much different from the first two payments. Plus, any details could change again — but the version of the bill that passed the House, plus the new Senate amendments, provides us with enough details to go on.

Assuming the third check remains at $1,400, a family of four could get $5,600, compared to the $2,400 they received from the $600 check. We’ll explain exactly how that works. For more information, here are the top things to know about stimulus payments today, including the timeline for receiving a third check and what could happen if a third check is approved during tax season. This story is updated regularly.

Stimulus check formula: Key information to remember

Before we dig into what may change for a potential third stimulus check and what the outcome would mean for you, here’s how it works. In general, your tax return is one of the most important factors in determining your stimulus check total. The other factors include your adjusted gross income, or AGI, and the stimulus check formula. You can still qualify for a stimulus check if you’re a nonfiler who doesn’t pay taxes too.

The major variables the IRS plugs into the stimulus formula are:

  • Your AGI per your 2019 or 2020 federal tax returns.
  • Upper limits for single taxpayers, heads of household (for example, a single person with at least one child) and married couples filing jointly.
  • The number of eligible dependents you claim.
  • “Reduction” or “phase-out” rate — the amount your total would drop for every $1,000 you make above the income limit that allows you to qualify for the full check amount. In other words, the IRS calculates a partial payment if you don’t qualify for the full amount.

Stimulus check formula: Your $1,400 check amount could be different now screen shot 2021 02 03 at 2 18 23 pm


Now playing:
Watch this:

Stimulus check No. 3: What you need to know



2:59

How the third stimulus payment targets your income way more this time

The recent proposal to “target” the $1,400 stimulus check would keep the highest earners from receiving a partial payment. If the proposal is adopted, the qualifications would be:

  • Full $1,400 amount if you earn less than $75,000 (single taxpayer); $112,500 (head of household); $150,000 (married).
  • Disqualified at $80,000 (single); $120,000 (head of household); $160,000 (married).
  • Phase-out rate increased to preserve this upper limit.
  • These high earners would not receive partial checks even if they have dependents.

Dependents could increase the total amount of your new stimulus check

With the previous two stimulus checks approved in March as part of the CARES Act and then in December, it was possible to get a partial payment even if you exceeded the maximum income limit — if you had dependents. For example, say a married couple with an AGI of $200,000 claimed two dependents. Using the previous formula, from a $1,400 stimulus payment round that family could still get a $600 check.

That’s because the previous formula begins with the largest amount you’d be eligible to receive (for example, $1,400 per single taxpayer or $2,800 for joint filers) and adds $1,400 for each qualifying dependent. Then it reduces the total possible sum according to your AGI and the phase-out rate.

It’s a little like starting a test with a perfect 100 point score and subtracting a point for every question you miss, rather than starting with zero points and adding them all up at the end of the test.

coins-measuring-spoons  Stimulus check formula: Your $1,400 check amount could be different now coins measuring spoons

Multiple factors can affect your stimulus check payment.


Angela Lang/CNET

But in this case, the dependents you name can start you at a higher value, say 110 points in our classroom example. So by the time you subtract “points,” you may still get more than people who don’t have dependents — even if your AGI is above the maximum cap. The more child dependents you have, the higher your starting value and the higher your ending value, too.

The proposal to target stimulus checks would set a firm cutoff, which means that it would start by evaluating your AGI. If you’re over the limit, it wouldn’t matter how many dependents you have. You still wouldn’t be eligible for a check.

On the other hand, a family with a large number of dependents and an AGI within the boundaries could still potentially receive a large partial payment, as long as they come in below that absolute upper income limit. You can experiment with our stimulus calculator.

Phase-out and reduction rate: Why they’re fundamental and how they work

A sliding scale is involved here. With the second check, for example, if your AGI was less than $75,000 as a single taxpayer (that means no kids), you should have received the entire stimulus check total of $600. If you made more than that, the size of your check would diminish until $87,000, after which point you’d be ineligible.

For the planned $1,400 stimulus check — things have recently changed — you might receive the full $1,400 amount if you earn under $75,000 a year (your AGI as a single taxpayer), with diminishing returns up until an $80,000 cutoff. You’d receive a partial check for an AGI between $75,000 and $79,900. Again, you can see the differences in our $1,400 stimulus check calculators.

For heads of households and married couples with dependents, these other household members are an important part of the equation — up to a point (see above).

For more information, here are the top things to know about stimulus checks. And see how SSDI recipients and checksolder adults and retirees and people who aren’t US citizens or Americans who don’t live in the US could also qualify, including families with mixed-status citizenship.

[ad_2]
Source link