Questions and answers about the $1,400 relief payments
President Biden this week is expected to enact a $1.9 trillion coronavirus relief package that authorizes direct payments of $1,400 for most Americans.
A House vote on the Senate-passed measure is likely to take place in the next day or two, sending the bill to the White House for Biden’s signature and giving him the first major legislative accomplishment of his presidency.
The direct payments in the new measure are bigger than the payments of up to $1,200 per adult and $500 per child from last spring. They also exceed the second-round payments of up to $600 per person from a relief bill signed by former President Trump in late December.
But there are changes to eligibility requirements in this latest round.
Here’s what you need to know about the $1,400 stimulus payments.
Who is eligible for the checks?
Much like the first two rounds of payments, individuals with income of up to $75,000 and married couples with income of up to $150,000 are eligible for the full payment amounts under Biden’s relief measure. However, the payments phase out faster above those thresholds, meaning some households that were eligible for partial payments in prior rounds won’t be eligible this time.
Under the Senate-passed bill, individuals with income between $75,000 and $80,000, and married couples with income between $150,000 and $160,000 will receive partial payments. Those who have income above $80,000 and married couples with income above $160,000 will not be eligible for any funds.
House Democrats had initially proposed higher cutoffs, but they were lowered in the version of the relief package that is expected to become law in order to win the support of centrist Democrats in the Senate.
The income cutoffs aren’t the only eligibility change compared to the two previous rounds.
Unlike previous payments, adult dependents — such as college students, disabled adults and elderly relatives — are now eligible for payments. Previously, only dependents under 17 were eligible.
As with previous rounds, eligible recipients generally need a Social Security number. In cases of mixed citizenship status families where only one spouse has a number, the family would get a payment of $1,400 for the spouse with a number, plus $1,400 for each dependent who also has a Social Security number.
When should people expect to receive their payments?
The Treasury Department and IRS are expected to start sending out the payments almost immediately after Biden signs the bill into law.
Biden said Saturday that the payments will start to go out this month, and White House press secretary Jen Psaki on Monday added that the administration expects “a large number of Americans” will receive their checks by the end of March.
During a House Appropriations subcommittee hearing last month, IRS Commissioner Charles Rettig said the second round of direct payments began landing in taxpayers’ bank accounts just two days after the measure was signed into law on Dec. 27.
Rettig said at the time that if a third round of payments were enacted, the IRS believes it’s “prepared to appropriately serve the American people.”
What year’s tax returns are the payments based on?
Under the bill, the IRS is directed to make payments initially based on people’s 2019 tax returns or their 2020 returns if they’ve already been filed.
The bill then directs the IRS to make additional payments later this year in an effort to help people who filed their 2020 returns after the initial payments were made and who had less income in 2020 than in 2019. The additional payments would be in amounts equal to the difference between what households are entitled to based on their 2020 income and what the IRS already paid them.
Ultimately, the new round of payments are credits against people’s 2021 taxes. People who do not receive the full amount of the payments to which they are entitled can claim a credit when they file their 2021 tax returns next year. Those who receive payments this year and would be entitled for smaller payments based on their 2021 income don’t have to pay back the money.
Some lawmakers and tax professionals are encouraging people whose income declined in 2020 to file their tax returns as soon as possible in order to quickly maximize the amount of the stimulus payment that they receive. But Ken Corbin, a senior IRS official, advised last month that people should wait to file their tax returns until they have all of the necessary documents.
The IRS is instructed to make payments to people who are not required to file 2019 or 2020 tax returns, typically because they have very low income, based on other information available to the agency.
What if I never got one or both of the first two payments?
The IRS said in mid-February that it had issued all of the payments from the first two rounds that it could legally disburse.
People who did not receive some or all of the payment amounts to which they are entitled can claim the “recovery rebate credit” on their 2020 tax returns. Those who may not have gotten the full payment for which they’re eligible include taxpayers who welcomed newborns in 2020 and taxpayers whose income fell substantially in 2020.
The first round of payments was enacted in late March 2020, and the second round was enacted in December of that year. The IRS said last month that it has issued more than 160 million first-round payments and more than 147 million second-round payments.