Economic Impact Payments
As of the time I write this article, three Economic Impact Payments (also known as “stimulus checks”) have been issued to eligible recipients as part of the pandemic relief. Each set of payments have had slightly different rules and eligibility, so I have created an outline below to help you navigate how it could impact you.
THE THIRD ROUND OF STIMULUS CHECKS (March - 2021)
The most recent checks were included in the American Rescue Plan, which was enacted on March 11, 2021. Eligible individuals will receive a payment of $1,400 ($2,800 for married couples), plus an additional $1,400 per eligible child. However, those payments phase out quickly for incomes above $75,000 for single taxpayers, above $112,500 for taxpayers filing as head of household, and above $150,000 for married couples filing jointly. Taxpayers would be ineligible for any payment (unless they have a qualifying child) if their income levels exceed:
- $80,000 for single taxpayers
- $120,000 for taxpayers filing as head of household
- $160,000 for married couples filing jointly
If you’ve filed your 2020 taxes, your check would be based on that income. If not, it would be based on your 2019 tax filing. From a tax planning standpoint, if your 2019 income was too high and makes you ineligible, but your 2020 income is lower you may want to file your return asap to become eligible for a check. If your 2019 income was lower, but your 2020 income is high enough to phase you out, you may want to delay filing your tax return at this point (tax deadline is now May 17th, 2021). There is no certainty to whether the IRS will recapture your check if your 2020 income phases you out after you receive your check, but thus far they have not asked for other stimulus check repayments.
Similar to previous payments, most taxpayers will receive the funds by direct deposit. For Social Security and other beneficiaries who received previous payments via debit card, they will receive this third payment the same way.
THE SECOND ROUND OF STIMULUS CHECKS
The second round of stimulus payments were authorized on December 27, 2020 as part of the Consolidated Appropriations Act, 2021. Those payments typically totaled $600 per person, or $1,200 for married individuals, plus $600 for each qualifying child. The payments began phasing out at the same income levels as the current payments, but the maximum income levels to receive a payment were slightly higher. Taxpayers were ineligible for any payment, unless they had a qualifying child, above the following income levels:
- $87,000 for single taxpayers
- $124,500 for taxpayers filing as head of household
- $174,000 for married couples filing jointly
THE FIRST ROUND OF STIMULUS CHECKS
The first round of stimulus payments were authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Those initial payments issued earlier in 2020 were $1,200 per person, or $2,400 for those filing jointly, plus $500 per qualifying child. The payments began phasing out at the same income levels as the current payments, but since the payments authorized under the CARES Act were larger, the maximum income levels to receive a payment were also larger:
- $99,000 for single taxpayers
- $136,500 for taxpayers filing as head of household
- $198,000 for married couples filing jointly
If you have any questions as to how these stimulus checks impact you or your taxes, please don't hesitate to reach out and schedule a meeting!
Dave Alison, CFP®, EA, BPC