Today, Congress passed H.R. 1319, the American Rescue Plan of 2021, which was then signed into law by President Biden. The $1.9 trillion stimulus bill includes direct payments of up to $1,400 for individuals, billions to help schools and colleges re-open, and funding for vaccine distribution.
The below guidance based on the most current review of the bill, but please consult your accountant before making any financial decisions.
Who is eligible for the third round of payments?
U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for the third payment. Eligible individuals will automatically receive an EIP of up to $1,400 for individuals, or $2,800 for married couples, and up to $1,400 for each qualifying child. Generally, recipients with adjusted gross income for 2019 (2020 if they have filed their 2020 tax returns already) up to $75,000 for individuals, and up to $150,000 for married couples filing joint returns and surviving spouses, they will receive the full amount of the third payment. For filers with income above those amounts, the payment amount is reduced.
What will people need to do in order to receive the rebate?
Payments are automatic for eligible taxpayers who filed a 2019 (or 2020) tax return; those who receive Social Security retirement, survivor, or disability benefits (SSDI), Railroad Retirement benefits, or Supplemental Security Income (SSI); and Veterans Affairs beneficiaries who didn’t file a tax return. Payments are also automatic for anyone who successfully registered for the first payment online at IRS.gov using the agency’s Non-Filers tool, or anyone who submitted a simplified tax return that has been processed by the IRS.
Will the IRS notify recipients after the rebates are sent?
In previous rounds, people received an IRS notice, or letter, after they received a payment with the amount of their payment. Recipients should keep this for their tax records.
Are there payments for parents?
The bill provides additional help to parents of dependent children in the form of tax credits. Income has a significant impact on the credits. NBC News has a good overview.
When will they be sent?
According to the White House press secretary, the IRS and Treasury are working hard to get the payments out as soon as possible. The direct deposits could potentially begin being sent to accounts as soon as this weekend. The direct deposits will then be followed by checks, and finally prepaid cards.
Are the third round of payments taxable?
The EIPs will not be counted as taxable income for recipients. The rebates are a credit against tax liability, and are refundable for taxpayers with no liability to offset.
Are the payments subject to garnishments?
H.R. 1319 did not provide the same clear exemption from garnishments that the previous two rounds did. There may be state laws that prohibit garnishment of these funds.
Are the third round of EIPs subject to reclamation?
The payments have the status of a tax rebate and should not be subject to reclamation.
To view the American Rescue Plan of 2021 online at congress.gov.