This Friday, the House intends to vote on theto provide relief to Americans as quickly as possible. This is just one step in a lengthy process, as the bill would then need to go to the Senate for amendments, with a possible result of the looking much different than the . The IRS will use a formula that determines how much your household will get — the payment amount is and . This could result in a ( ), but could also leave you with . ( .)
An exact formula to determine your share of a third stimulus check won’t be finalized untilthe . We can, however, expect some people to be that have been proposed with the new bill –even if they received the first two checks. But some families could receive more with this round of checks than they did with the last two.
If the new plan is approved as is, a family of four could get $5,600, versus the maximum $2,400 they received with the. We’ll further explain below how it works. To keep you updated, here are the today, including the and what happens if a . This story is updated regularly.
Key things that make up the stimulus check formula
Before we dig into how a potential third stimulus check may change the equation and what the outcome would mean for you, here’s how it works. In general,is one of the most important factors in determining your stimulus check total. The other factors include your adjusted gross income, or , and the stimulus check formula. You can if you’re a too.
The major variables the IRS plugs into the stimulus formula are:
- Your per your .
- 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 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, this part of the equation calculates a partial payment if you don’t qualify for the full amount.
The formula for a third stimulus check could still change. Here’s what we know
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 under $75,000 (single taxpayer); $112,500 (head of household); $150,000 (married)
- Disqualified at $100,000 (single); $150,000 (head of household); $200,000 (married)
- Phase-out rate increased to preserve this upper limit
- These high earners would not receive partial checks even if they have dependents
Knowing the key details for dependents is important
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 anof $200,000 claims two dependents. With a $1,400 stimulus check that uses the previous formula, 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 every point you “miss,” rather than starting with zero points and adding them all up at the end of the test.
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.
Phase-out and reduction rate: What you should know about how a targeted payment affects you
A sliding scale is involved here. With the second check, for example, if yourwas less than $75,000 as a single taxpayer (that means no kids), you should have received the entire . 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 $1,400 stimulus check — note this could still change — 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 a $100,000 cutoff. You’d receive a partial check for an AGI between $75,000 and $99,900. Again, you can see the differences in our.
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. And see how , and people who could also qualify, including families with .