You Filed A Paper Return
The IRS warned earlier this year that people who file paper tax returns could face delays. That’s because the IRS is still dealing with a logjam of tax returns filed in 2019 and it’s likely that 2020 returns filed on paper will also face processing delays.
The tax agency’s backlog is partially due to the pandemic, which prompted the IRS to shift its workers to remote work. When that happened, it stored paper tax returns in trailers until it could get to them. At the end of January, it still had 6.7 million returns awaiting processing.
People should file an electronic return in 2020 to ensure faster processing of their taxes, as well as their refunds and stimulus payments, IRS and Treasury officials said March 12.
Coronavirus Stimulus Check: Why Filing Taxes Early Is Good
If you are wondering why filing taxes early is good, it is because the amount of your check depends on your AGI of 2019 or 2020. So, if your income reduced in 2020, which is most likely, then your third stimulus check could be of a higher amount.
Congress has still not approved the third stimulus package, but it is very likely there will be one, and that it will include stimulus checks. As per the latest proposal from House Democrats, those with income up to $75,000 would qualify for the full $1,400 stimulus checks .
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On the other hand, those earning more than $75,000 would see their check amount reduced. No payment would go to those with AGI of more than $100,000 per annum. This means your latest AGI will matter a lot in deciding your stimulus check amount.
So for most people, filing 2020 taxes as soon as possible is going to be to their advantage. This year, the IRS will start accepting tax returns from February 12. Those who file their return electronically will likely have their stimulus payment based on that return.
You Could See Additional Stimulus Payments In 2021 Or Even 2022
If you filed a 2019 tax return the Internal Revenue Service will automatically send out the EIP3 based on the information the agency gets from that filing. Then when you file a 2020 tax return, and it gets processed, the agency will adjust your payment with aplus-up if you are eligible for larger payment. Being that the third round is a tax credit for the 2021 fiscal year, some tax payers may become newly eligible to receive an additional payment for a number of circumstances when they file their 2021 tax return next year.
New payments will be made to those who didnt qualify based on their 2020 tax filings but do according to their 2021 tax return. If for some reason during 2021 your income drops below the income eligibility cap, you could claim the EIP3 on the 2021 Recovery Rebate Credit. Likewise, if you have a new addition to the family that didnt receive a third stimulus check this year, youll be able to claim that dependent in 2022, for example a newborn baby.
After each Economic Impact Payment, #IRS sends you information about the payment, how it was made and how to report amount that wasn’t received. For details see:
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How The Irs Calculates The Third Stimulus
The Internal Revenue Service will use information, including your income, from your 2019 return to calculate the next Economic Impact Payment, if your 2020 tax return isn’t filed and processed by the time the IRS starts issuing the third stimulus payments.
The third stimulus payment is based on such things as whether you’re filing single or married filing a joint return, how many dependents you have, and your adjusted gross income.
The latest goal is to better target the COVID-19 relief cash to households that may need the money the most, including families that have been unable to receive unemployment or other benefits and have experienced a financial hardship during the pandemic.
Under the latest program, additional payments could go to all dependents, not just children 16 and younger. As part of the third stimulus, all dependents regardless of age qualify for up to an extra $1,400. As a result, college students age 23 or younger could qualify, or so could elderly parents living with you, according to the measure that passed the Senate on Saturday.
What If I Didn’t Receive A First Or Second Stimulus Check
The IRS will be working through getting past economic payments paid out during this time as well. The agency has a tool on its website so that taxpayers can claim missing stimulus payments they were owed.
If your first or second stimulus check never arrived, the IRS says to go to its Recovery Rebate system. First you must file your 2020 tax returns, even if you are not required to file. Then you will need to know the amount you were owed.
You will find the Recovery Rebate Credit Worksheet here on the IRS website for more on how to apply and claim your impact payment money.
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Where Is My Third Stimulus Check
By April 1, more than 130 million payments had gone out, the IRS said, mostly by direct deposit. A batch of payments issued March 24 included about 15 million paper checks and 5 million prepaid debit cards, which take longer to arrive than bank deposits.
Here’s the expected timeline for delivery of stimulus checks, based on updates from the IRS and previous rounds of payments:
- The first wave of direct deposits hits bank accounts.
- Direct deposits continue checks are mailed.
- Checks and debit cards arrive electronic payments arrive for federal benefits recipients
You can track your payment using the IRS’s “Get My Payment” tool.
A stimulus check is a non-taxable cash payment sent to qualifying Americans by direct deposit, check, or debit card. The money can be used however you want and does not need to be repaid to the government even if you get too much.
Other names for stimulus checks include Economic Impact Payments and the Recovery Rebate Credit.
How Will Dependents Get Their Stimulus Check
One major difference between this round of checks and the last two is that dependents of any age are eligible to get money.
But to be clear: Eligibility for a stimulus check lies with the person who claims the dependent on their tax return. In most cases that’s a parent or caregiver. They’re the person who qualifies and gets paid. An additional $1,400 is added to that person’s check for each dependent with a Social Security number who is claimed on their tax return.
According to the IRS, adults who rely on another person for more than half of their expenses can be claimed as a dependent. That includes students up to age 19, or age 24 for full-time college students. Dependent adults can also include disabled people and retirees.
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What Are The Income Limits For The Third Round Of Stimulus
The maximum income for the full credit is:
- $75,000 for Single/Married Filing Separately taxpayers
- $150,000 for Married Filing Jointly taxpayers
- $112,500 for Head of Household
The credit phases out between:
- $75,000 and $80,000 for Single/Married Filing Separately taxpayers
- $150,000 and $160,000 for Married Filing Jointly taxpayers
- $112,500 and $120,000 for Head of Household taxpayers
A couple filing Married Filing Jointly is not eligible for a stimulus payment if their income is $160,000 or greater. A Single taxpayer would no longer be eligible if their income is $80,000 or greater. A Head of Household taxpayer would no longer be eligible if their income is $120,000 or greater. The number of dependents has no bearing on the phase-out for this round three of stimulus.
Who Qualifies For A Payment
Taxpayers must have a Social Security number to be eligible for a payment and meet the income requirements detailed above.
While the steeper income phase out reduces the number of taxpayers qualifying for this stimulus payment, all dependents of eligible taxpayers will also receive a payment for the first time. That includes millions of college students, disabled adults and elderly Americans. Mixed-status families in which some members have Social Security numbers and some do not are also eligible, as they were for the second payment.
Like the second stimulus payment, those who owe child support should not have any of their stimulus money withheld.
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Third Stimulus Check: Here’s What Could Delay Or Lower Your Payment
The third stimulus check is already hitting some bank accounts, just days after President Joe Biden signed the American Rescue Act into law. But while some households will see the funds as early as this week, others may be in for a longer wait.
About 85% of people will receive one of the $1,400 checks, Mr. Biden said on March 12. It’s also likely that some of the issues that stymied delivery for some people in the previous two rounds of stimulus could cause a repeat situation the third time. For instance, some people who didn’t have a bank account on file with the IRS during the previous two rounds of checks had to wait several weeks for debit cards or paper checks to reach their homes.
It’s most likely that people who have filed their 2020 or 2019 tax returns and have a bank account on file with the tax agency will quickly receive their stimulus checks through direct deposit, based on the prior payment rollouts. That’s because the IRS prioritizes getting the stimulus money out quickly to those it knows it can reach and it’s a massive effort, given that the tax agency has $422 billion in funds to distribute to more than 100 million taxpayers.
About 100 million payments will be issued over the next 10 days, according to IRS and Treasury officials on a Monday conference call.
Here’s what could hold up some people from receiving their money, or receiving the incorrect amount.
What If You Never Get Your Third Stimulus Payment Or If Any Money Is Missing
If you’re eligible to receive a third stimulus check, but yours never arrives by direct deposit, paper check, EIP card or Direct Express card , you’ll likely have to take an additional step to claim that money. This happened to millions of people during the first and second round of payments for several reasons, including IRS errors, out-of-date banking information or addresses and nonfilers not taking an extra step to get their information to the IRS.
Much like with the first and second checks, you’ll likely be able to claim any missing money from the third check owed to you or your dependents during tax season next year, 2022. However, the IRS has yet to say if there will be an opportunity to claim missing money in 2021 instead. The best thing to do right now to make sure your third check does arrive is to file your tax return as soon as possible, even if you don’t usually have to file one.
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Look On Your Latest Tax Return To Find Your Agi
Your AGI is relatively easy to find it’s listed on your annual tax return. Specifically, it’s on line 8b of your 2019 tax return.
Your stimulus check eligibility will be determined by the AGI on your latest tax return. If you’ve not yet filed your 2020 taxes, the AGI from your 2019 tax form will determine eligibility. If you’ve filed your 2020 taxes and they’ve been processed, that number will be used.
Compare your AGI to the numbers above to see whether or not you’ll qualify for a check.
What To Do If Won’t Be Getting More Money
There’s been a lot of talk about a fourth stimulus check, but no action so far. If you’ve already received all the Round 3 money you’re entitled do and could use a little more help right now, here are some places to find it on your own.
First, cut the cost of your debt. If youve been relying on plastic to get through the pandemic, you’ll want to roll your high-cost credit card balances into a single, lower-interest debt consolidation loan. You’ll settle your debt sooner and pay far less in interest.
Then, wring some savings out of your insurance bills. If you havent shopped around for a better rate on your auto insurance in the last year, you might easily be overpaying by more than $1,000 a year. Take a minute to compare insurance quotes to find the best rate on your coverage.
And if youre a homeowner, use the same approach to cut down your homeowners insurance costs by hundreds of dollars a month.
Even when you’re on a tight budget, you need to shop for the essentials here and there. Avoid paying too much whenever you shop online by that will automatically scour the web for better prices or coupons.
Finally, when it comes to investing, you dont need a $1,400 stimulus check to earn returns in the record-smashing stock market. A popular app allows you to invest your “spare change” and grow your pennies into a diversified portfolio.
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Stimulus Checks: Children And Dependents
Q. I had a baby in late 2020. Am I eligible for the child stimulus payments?A. If you had a baby in 2020, you are eligible for the $1,400 credit in 2021. This will be paid in an advance third stimulus payment if you filed your 2020 return by the time the payments were issued. If you didnt receive the first or second stimulus payment for your baby, you can claim the recovery rebate credit when you claim the child on your 2020 return.
Q. I have joint custody of my daughter with my ex-spouse, and I claimed her on my 2019 taxes . What do we need to know when my husband claims her?A. For the first and second payments, the spouse claiming the child in 2020 will claim the children and could receive the recovery rebate credit on the 2020 return.
However, for the third payment, divorced parents who alternate claiming their dependents each year, if an advance payment is received by one spouse for the dependent, no additional payment can be made for the same dependent on the other spouses return.
For example, if the payment is issued to Parent 1 because they claimed the child on their 2020 return, Parent 2 cannot claim the credit on their 2021 return even though they didnt receive the payment from Parent 1.
The second way is claiming the Recovery Rebate credit on your 2020 taxes, which you can do for the first or second payments. Youll receive the correct amount in the form of a tax credit that either lowers your tax bill or gets added to your refund.
Who Should Wait To File Taxes To Increase Their Stimulus Check
If you flip the script on some of the examples above, you can see how some people could benefit by waiting to file their 2020 tax return. Depending on the exact timing, this could force the IRS to use your 2019 tax return to process your third stimulus check. So, for example, you might want to delay filing your tax return this year if:
Your income was higher in 2020
You had a death in the family in 2020
You got divorced in 2020 or
You can’t claim your child as a dependent anymore starting in 2020.
Again, here are some examples:
Higher Income in 2020 Cheri got a promotion and a big raise last year. As a result, her AGI jumped from $80,000 in 2019 to $95,000 in 2020. She is single with no children. Using her 2019 return, Cheri would get a $1,120 third stimulus check. However, if the IRS used her 2020 return, she would only get $280. By waiting to file her 2020 return, Cheri could increase her stimulus check by $840.
Of course, there’s a potential drawback to delaying your 2020 return you also delay any refund due. Last year, the average refund was $2,549. So, if you’re expecting a 2020 refund, you have to decide if the extra money you’d get in your stimulus check by waiting to file is worth the delay in getting your refund.
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Million Payments And Counting
The tax agency has yet to say it has wrapped up the most recent stimulus disbursement.
Officials have been known to make formal announcements once a round of payments is done. In February, the IRS issued a news release saying it had finished sending out all the stimulus checks to eligible families from the pandemic’s first and second rounds.
The first, which was launched in the spring of last year, included 160 million payments, worth more than $270 billion. The second, which kicked off in the final days of 2020, distributed 147 million payments, worth more than $142 billion.
Round 3 which began rolling out on March 12 has already involved more than 169 million payments, valued at around $395 billion.
A recent census survey found nearly half the recipients of third-round checks have used the money to pay down debt. A third put the cash into savings, and the rest spent it on other things which, for many, may have included affordable life insurance. Demand for policies has seen a surge through the pandemic.