The President has officially signed the American Rescue Plan Act of 2021 into law. Within this new stimulus bill are a third round of a direct checks to eligible Americans, called “recovery rebates”—of up to $1,400 for every “eligible individual.”
Sounds great, right? Of course, the devil is in the details.
How Much Will You Receive?
Each eligible individual in your household should receive $1,400. Eligible individuals include:
- You, as an individual taxpayer
- Your spouse (if you are filing a joint tax return)
- Any dependents you are claiming on your tax return, regardless of their age
For example: A married couple filing jointly and claiming three dependents on their tax return would be eligible for $1,400 x 5 = $7,000. This is the case even if the dependent is, say, an adult child in college, or a parent in assisted living.
The catch? Whether you receive a full, a partial, or no rebate depends on your Adjusted Gross Income (AGI) on your tax return:
|If you are …||You receive a full rebate if your AGI is …||You receive a partial rebate if your AGI is …||You won’t receive a rebate if your AGI is …|
|Single, or married filing separate||Under $75,000||$75,000–$80,000||Over $80,000|
|Head of household||Under $112,500||$112,500–$120,000||Over $120,000|
|Married, filing jointly||Under $150,000||$150,000–$160,000||Over $160,000|
All this begs the question: Which AGI are we talking about? Technically, the stimulus payment is a 2021 Recovery Rebate. But like our Great American Pastime (baseball), you actually get up to three “at bats,” or years in which to qualify for a full or partial rebate.
Pitch #1: Your 2019 or 2020 Tax Return, Already Filed
Initially, the IRS will look at the AGI reported on the most recent tax return you’ve already filed, whether that’s your 2019 or 2020 return. If your AGI falls within the “full rebate” parameters above, you can expect to receive your full 2021 Recovery Rebate. Where will the money go? If the IRS has a checking account on file for you, they should be able to issue a direct deposit into that account. Otherwise, they should mail you a check or debit card to your address on file.
Note: Even if you end up reporting higher income in subsequent years, you will get to keep the full amount of any payment you receive from Pitch #1. The IRS will not… Continue reading