The US Congress had earlier approved two rounds of COVID-19 stimulus checks. The first round was a $1,200 payment from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This act was signed into law in March 2020.
A few months down the line, President Trump had signed a second $900 billion economic relief package on December 27, 2020 that included $600 stimulus checks. And now, a third round of payments, which is part of the Biden administration’s “American Rescue Plan,” has been signed into law.
This $1.9 billion plan guarantees a stimulus amount of up to $1,400 for millions of Americans, including their dependents.
Most American taxpayers are eligible to receive a third stimulus check. Although, there are some exceptions. People classified as nonresident aliens, anyone who can be claimed as a dependent on someone else’s return, or people without a Social Security number won’t receive a payment.
The stimulus act will be using data from your latest tax return filings (2019 or 2020). It will use 3 main data points to finalize your stimulus amount:
The third round of COVID stimulus has established certain AGI caps. If your AGI on record is more than the set cap, there will be a reduction in the stimulus pay from the default amount of $1,400.
There are 3 distinct caps for individuals, couples, and heads of household.
One big change with the latest stimulus package is that an additional amount of $1,400 is tacked on to your payment for all dependents. For the first two rounds, the additional amount had a limit of $500 and $600, respectively.
The stimulus payout will reduce once the AGI exceeds the established caps. The reduction would continue until the AGI keeps increasing and touches the final limit. Once that limit is exceeded, the person becomes ineligible for a stimulus check.
The AGI reduction between the set cap and the final limit is based on the rates defined by the IRS. The income levels at which the third checks start to be phased out are the same as the levels or caps used for the first two stimulus payments.
The rates at which the checks are phased out are different and slightly non-uniform this time. Thus, you might not get a full third stimulus check even if you received full payments in one or both of the first two checks.
You will not receive a COVID-19 stimulus check if you are:
You can use our stimulus calculator to find out the estimated amount you can receive in the third paycheck. This online tool uses the exact reduction rates as provided by the IRS.
To calculate your amount, fill in your filing status, AGI, and the number of dependents, as recorded in your latest tax return filings (2019 or 2020).
Even if they haven't filed their tax return for 2020 or 2019, some people are eligible for the stimulus check. For example, Social Security beneficiaries and railroad retirees who are not required to file a tax return will automatically receive a $1,400 stimulus check.
Also, if you’re a couple and only one of you has a Social Security Number, then the bill confirms that only one check of $1,400 will be sanctioned. A notable exception is if one spouse was a member of the Armed Forces during the taxable year. Then, the couple will be eligible for the whole $2,800.
If you're working on your tax return and need professional guidance, an all-in-one bookkeeping and tax solution such as Fincent can help you file your taxes accurately and on time.
The US Treasury Department had already started delivering the third round of stimulus payments on the weekend of March 13-14. But many taxpayers did not receive their payment until March 17, which is the effective date when banks get the money from the government.
If you have filed your taxes and are eligible for the stimulus payment as per the above-mentioned criteria, you shall definitely receive your calculated pay. Most non-taxpayers started receiving their payments from April 7 onwards.
The US Treasury Department will be sending the stimulus payments via 3 different modes:
Direct deposits are known to happen at the earliest. Paper checks and EIP debit cards usually take time as they come via mail.
If you receive an EIP card in the mail, be sure to read and review the material with it. These cards come with fees for checking your balance, using an ATM for withdrawals, or using an out-of-network ATM.
As the stimulus payments are based on the tax return filings, there’s a lot to keep in mind for the normal taxpayer when it comes to availing the stimulus.
The US Government is now disbursing money to help businesses that were financially impacted by the pandemic. So if you qualify for the check, be sure to calculate your stimulus payout and create a viable financial roadmap for your business.
If you have not yet filed your taxes or have a hard time figuring out what you can expect from your COVID-19 stimulus check, reach out to Fincent. Our friendly bookkeeping professionals are ready to help you save time and money on your bookkeeping needs so that you can get back to successfully growing your business.
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