The provision of the American Rescue Plan Act (“ARPA”) receiving the most attention is an additional round of stimulus payments. Direct payments of up to $1,400 for each eligible individual have started to arrive into bank accounts this weekend per the IRS, merely days after the President signed the ARPA into law.
Below are some of the questions we’ve received from clients so far and our dedicated consulting team’s response.
Will I receive the third stimulus payment?
MKS: Eligibility for the third stimulus payment is determined by the IRS using adjusted gross income (“AGI”) on the most recently processed tax return (in the vast majority of cases this will be the 2019 return, but 2020 information will be used if available).
- Individuals will receive $1,400 if the reported AGI is less than $75,000. There is a small phase-out window as AGI increases between $75,000 and $80,000.
- Married couples will receive $2,800 if the reported AGI is less than $150,000. There is a small phase-out window as AGI increases between $150,000 and $160,000.
- Head of Household filers will receive $1,400 if the reported AGI is less than $112,500. There is a small phase-out window as AGI increases between 112,500 and $120,000.
In addition, eligible individuals will receive $1,400 per dependent (including adult dependents and full-time students under the age of 24).
Should I rush to file my 2020 tax return to ensure receipt of the maximum stimulus payment?
MKS: No! There is no rush.
The IRS has a plan to address those that would benefit from filing the 2020 tax return as soon as possible. If your 2019 AGI was used to calculate the stimulus amount and your 2020 AGI is lower, an additional payment will be sent to “make you whole” as long as your 2020 tax return is filed by July 14, 2021. We expect there to be further communication on a final timeline for when 2020 returns must be filed, so this date is subject to change.
What if I didn’t receive a previous stimulus payment that I should have been eligible for?
MKS: If you did not receive one or both of the 2020 stimulus checks and can’t determine why, do not worry. Remember, these payments were always meant to address hardships during the 2020 filing year. Your MKS tax professional will be discussing this with you when reviewing your 2020 return to ensure you recoup any eligible benefit that was missed to date.
For additional information, click here to visit the IRS website. This page includes a link to the “Get My Payment” portal, provided by the Treasury Department. We highly suggest anyone concerned about the stimulus payments to utilize the portal first before taking any additional steps.