Who Qualifies for a $1,400 Stimulus Payment Under the American Rescue Plan?

President Joe Biden’s $1.9 trillion American Rescue Plan is moving forward, designed to help those affected by the coronavirus, which increases the likelihood of a third round of stimulus payments.

The Senate approved the plan on February 27, and it is now moving to the House. The President could sign the bill into law as soon as March 14, when federal unemployment provisions expire.

Though the plan has not been finalized, it may incentivize you to file your taxes early this year in order to maximize your potential payment.

So, who’s eligible for this third round of payments, and how are these different from previous stimulus checks?

How Much?

The provision for a third stimulus check in this plan accounts for $1,400 paid directly to taxpayers and each of their dependents. This means that an eligible family of four, for example, could receive a total payment of $5,600.

The payments are based on either 2019 or 2020 income, depending on your last filing. So, if your income dropped in 2020, or you had a baby, you may be able to maximize your payment by filing your 2020 taxes ASAP. If you had twins or triplets in 2020, you hit the jackpot!

Before you file your taxes, learn more about how Biden’s tax plan could affect you.

Who’s Eligible?

Individuals with an adjusted gross income (AGI) up to $75,000 (and married couples up to $150,000) will receive the full $1,400 each and an additional $1,400 for each dependent.

After those income thresholds, the payments phase out. Individuals who earn over $100,000 (and married couples over $200,000) are not eligible to receive a payment.

How is This One Different?

Unlike that last two rounds of coronavirus-related stimulus payments, adult dependents are eligible to receive a check with this third round. These adult dependents, by and large, include college students, disabled adults and elderly Americans.

What Else is on the Docket?

The American Rescue Plan also includes provisions that would raise the federal minimum wage to $15 per hour by 2025.

The bill may also increase weekly unemployment benefits from $300 to $400, provide funding for small businesses, schools, and cities and states, offer families with kids a tax break and boost government spending on COVID-19 testing and contact tracing.

You can read more about the American Rescue Plan here.

When Will the Checks be Sent?

If the bill passes the House and is signed by President Biden by mid-March, payments could hit accounts before the end of the month. Those with bank accounts setup for direct deposit through the IRS will likely receive payments first, while others will get their checks in the mail in the following weeks.

If you want to learn about how to time your tax filing to maximize this next potential round of stimulus payments, reach out to me at Ben@coveplanning.com or schedule a free consultation call.

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Ben Smith is a fee-only financial advisor and CERTIFIED FINANCIAL PLANNER™ (CFP®) Professional with offices in Milwaukee, WI, Evanston, IL and Minneapolis, MN, serving clients virtually across the country. Cove Financial Planning provides comprehensive financial planning and investment management services to individuals and families, regardless of location, with a focus on Socially Responsible Investing (SRI).

Ben acts as a fiduciary for his clients. He does not sell financial products or take commissions. Simply put, he sits on your side of the table and always works in your best interest. Learn more how we can help you Do Well While Doing Good!

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Ben Smith, and all rights are reserved. Read the full Disclaimer.