Why Your Next Stimulus Check Might Be Bigger Than You Expect

Man in a mask holding stimulus money
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It seems it’s only a matter of time before your next coronavirus stimulus payment arrives, now that the full House of Representatives has passed the $1.9 trillion relief package that calls for a third round of direct payments.

The 594 pages of legislation, known as the American Rescue Plan Act of 2021, heads to the Senate next.

So, how money much would your household receive this time around?

If you have no dependents, you can expect $1,400 per taxpayer (or $2,800 per couple filing a joint tax return). That compares with $1,200 per taxpayer in the first round and $600 in the second round.

If you have dependents, though, your third stimulus payment likely would be a lot bigger.

Why the next stimulus payment is more valuable for those with dependents

There are two main reasons for which a household with dependents would receive considerably more money in the third round of stimulus payments, assuming the American Rescue Plan Act becomes law.

First, the amount for dependents is more than doubled, at $1,400. That compares with $500 in the first round and $600 in the second round.

Second, the American Rescue Plan Act defines dependents more broadly, meaning many dependents who did not qualify for a payment in the first two rounds will qualify this time around.

The laws that authorized the first and second rounds permitted payments for “qualifying children” as defined in section 24(c) of the federal tax code. This, in short, meant that taxpayers only received money for their dependents if they were under age 17.

The American Rescue Plan Act, however, allows payments for “dependents” as defined in section 152 of the tax code. Essentially, that includes anyone whom a taxpayer can claim as a dependent on their federal income tax return.

So, taxpayers who support non-child dependents — college students or disabled relatives, for example — likely would receive $1,400 for each such dependent.

If you’re unsure whether someone is your dependent for tax-filing purposes, use the IRS’ free online tool “Whom May I Claim as a Dependent?” or simply look at the “Dependents” section on the first page of your most recent federal return. Anyone you were able to claim as a dependent should be named in that section.

What else is different about the third round of stimulus payments?

Besides being a different amount and applying to more dependents, your third stimulus payment would work like the previous two, for the most part, if the American Rescue Plan Act becomes law.

The same income thresholds would be used to determine eligibility. So, for example, single taxpayers with an adjusted gross income (found on your tax return) of less than $75,000 and couples filing a joint return with an AGI of less than $150,000 would receive the full $1,400 per taxpayer or dependent.

For higher incomes, the payment amount would be phased out, meaning people with higher AGIs would receive less than $1,400 or not receive a payment at all.

Additionally, the third round of payments would not be considered taxable income for the same reasons we explained about the first two rounds in “Will You Owe Taxes on Last Year’s Stimulus Payments?

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