The $1.9 trillion American Rescue Plan has been passed by both the United States Senate and the House of Representatives. It now heads to President Biden’s desk, where it is expected to be signed into law as early as this week. Among a variety of economic recovery initiatives, the bill includes direct payments to Americans. Here is what you need to know!
HOW MUCH WILL I RECEIVE?
The New York Times reports that individual filers will receive $1,400 if they make $75,000 or less. Couples filing jointly will receive twice that if they make $150,000 or less. Those filing as heads of household will receive their full payment if they make $112,500 or less.
The maximum income threshold to receive a stimulus payment has changed this time around. Now individual filers who make $80,000 or more won’t receive a stimulus payment. The same applies to joint filers making $160,000 or more and heads of household making $120,000.
Payment amounts are based on the latest tax return available to the Internal Revenue Service (IRS). If you have already filed your 2020 return, they’ll use it to calculate your payment. If you have not filed your 2020 return, they’ll use your 2019 return to determine how much you’ll receive.
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HOW DO I TRACK MY PAYMENT?
The mechanics of this round of stimulus payments are expected to be similar to previous payments, according to The Wall Street Journal. The United States Treasury will likely direct the IRS to issue funds either through a check, debit card, or direct deposit. Although it is not possible to update direct deposit information specific to this round of stimulus payments, you can change your information by filing your 2020 taxes. The IRS will use whatever account is on your most recent tax return.
Stay tuned to IRS.GOV/EIP for more information over the coming weeks!
WHAT ABOUT DEPENDENTS?
Filers will receive a full $1,400 per dependent. To those who have children in college or older relatives who live in your household, that includes you, too! (The previous round of stimulus payments for dependents topped out at 17 years old.) If you claim either of these groups as dependents on your taxes, you’ll receive a stimulus payment for them. Babies born in 2021 are eligible for this payment and filers will receive $1,400 per child when they file their 2021 tax return next year.
WHAT IS THE CHILD TAX CREDIT?
The child tax credit will also change with the passage of the American Rescue Plan. Families with eligible children in 2021 can claim a credit of $3,600 per child if they are five and under or $3,000 per child between the ages of six and seventeen. The benefits of this change won’t come into full effect until Americans begin filing their 2021 taxes in 2022.
However, the bill does allow filers to receive an advance on their 2021 tax credit. Starting in July, you can get half of the overall tax credit you would receive. While it is unclear at this time how that payment will be delivered, it appears that funds would be sent via direct deposit on a periodic basis throughout the remainder of the year. The income levels for this credit are the same as for the stimulus payments outlined above.
HAVE UNEMPLOYMENT BENEFITS BEEN EXTENDED?
The current weekly federal unemployment benefit of $300 per month has been extended until September 6. It was slated to expire on March 14. Although the payment amounts were not increased to $400 per month, the bill includes a bigger tax benefit for households making under $150,000 a year. Now up to $10,200 of unemployment payments in 2020 are tax exempt.
WHAT ELSE IS IN THE BILL?
In addition to direct payments, the bill includes $350 billion for local governments and tens of billions of dollars to support COVID-19 vaccines and testing. These funds will help make it possible for the Biden administration to meet its goal of providing enough vaccine doses for all Americans by the end of May. The bill also contains funding to help students in kindergarten through the eighth-grade return to the classroom for in-person education.
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