Update 3/25/21: IRS has released guidance indicating that unemployment income (all of it – even above $10,200) does not count toward the $150,000/$75,000 income threshold. This makes a lot more people eligible for the $1,400 stimulus checks. Hat tip to CNBC and Dansdeals
Original Post:
Congress passed a third major stimulus bill today, and it’s expected to soon be signed into law by the President.
You can read the full bill here.
Contents
$1,400 Checks
$1,400 in direct payments to each U.S. resident and citizen, including minors and dependents with no limit.
- Calculator can be found below.
- Eligibility will be based on your 2019 or 2020 tax return – could be worth doing your taxes quickly if you earned less in 2020, but you’ll end up getting the money, in any case. (If you earned more in 2020, you may want to avoid doing your tax return until after receiving the stimulus.)
- Update your payment info with the IRS here.
Notable changes between this stimulus and the prior two rounds:
-
- $1,400 is more than the $1,200 from the first round and $600 from the second.
- Payment phases out from $75,000-$80,000 instead of $75,000-$99,000 from prior rounds (double all these numbers for couples filing jointly)
- You get a $1,400 for each dependent, regardless of age, e.g. you’ll get $1,400 as the provider for your 22 year old college student or your elderly parent who is legally dependent on you.
Additional Payment per Child ($3,000/$3,600)
Aside from the $1,400 stimulus deposit for each child, parents will get an additional $3,600 in payments per child age 5 and younger, and $3,000 per child age 6 through 17.
Typically the annual child credit is only $2,000, and now – for 2021 – it’s being increased to $3,000/$3,600, an extra $1,000/$1,600. Also, the credit can be received monthly, beginning July, instead of the typical lump sum payment at tax time (you’ll get half of it in monthly $250/$300 checks and the other half at tax time). Also, the credit is fully refundable whereas typically only part of it is fully refundable whereas some of it can only be used to offset income (not useful for those without much income). Additionally, age 17 is typically not eligible whereas now age 17 was added in.
The enhanced child credit gets phased out for those with incomes higher than $75,000/$150,000 single/couple. Those with higher incomes will still get the regular child credit amount based on the ordinary income limitations with no change.
$4,000 Childcare Benefit
Another major benefit for parents:
The bill also increases the amount parents can take as a tax credit for childcare expenses. Typically it’s between 20-35%, capped at most at $2,100. For 2021, it’ll max out at $4,000 and at 50% of eligible childcare expenses. This is way oversimplified version – read up on this more if it’s relevant to you.
Earned Income Tax Credits
For 2021, the Earned Income Tax Credit goes up for those without children – from the standard $543 to $1,502.
Food Stamps
The 15% increase in food stamps will continue through September (previously it was set to expire after June).
$300 Federal Unemployment Benefit
Through September 6th, the federal government will add $300 per week to your state’s regular unemployment benefit. E.g. if you are eligible for $400/week from your state, the feds will kick in $300 and you’ll end up getting $700.
This is essentially an extension of the $300 benefit from stimulus round 2 which is set to end on March 14th – it’ll now continue through September 6th.
Also, the bill exempts the first $10,200 of Unemployment Benefits from being taxable for those with income less than $75,000/$150,000 single/couple. This is for Unemployment Benefits earned in 2020 (not for 2021).
Business Programs
The Employee Retention Tax Credit has been extended through December. Also, additional funding has been given for the Payroll Protection Program and the Economic Injury Loan & Grant (EIDL) program.
Related:
- Stimulus (round 1): Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More
- Stimulus Round 2: Government to Send $600 To Most US Residents; $300 Unemployment Supplement; PPP Funding & More
Please let me know if you see any errors above or anything notable missing and I’ll try adding it in.
I just received a deposit into my checking account for an IRS refund. I already received my full 2020 refund in March but hadn’t received the unemployment refund. I was claiming unemployment in 2020 so I think that is what the refund was for. The transaction was “ACH CREDIT IRS TREAS TAX REF ON 10/27”
Chuck
Last 40 years have done paper returns, always have to pay, wait till 4/15th.
received stimulus 1 ($1200) paper check.
didn’t receive stimulus 2 ($600).
Feb. rumors of stimulus 3 ($1400)
3/1 did preliminary tax using $600 on line #30 which turned owed to refund.
Filed Electronically w/direct deposit.
Tax refund received by 3/15 direct deposit.
Stimulus 3 received direct deposit, week later.
Both direct deposit triggered a bank bonus.
Worked out well.
Anyone else receive their first two payments via DD but waiting for mail on third? My bank accounts haven’t changed and I already filed 2020 taxes. Seems weird.
Somewhat. My acct was closed, but the bank still promptly mailed a ck. The IRS site claimed that another dd was issued on 03/17. But, the site now says that a ck is scheduled to be sent in April.
I got the card. It’s from money network based in Atlanta. It goes through elaborate process of getting me to create an online account etc. Then when i try to tranfer the balance to my bank account it does not let me do it ” says invalid account status”. I am pretty sure they are doing it on purpose so they can hold onto the money as long as they can.
Anyone else able to transfer their card balance to a bank?
Never mind. I had to activate the card. Now the funds are being transferred to my bank account.
Also i am almost 100% sure UBI is coming in the future. No other reason to have you create accounts and send you cards.
Did anyone else have a child in 2020? I received extra $500 and $600 when filing taxes but not the extra $1400 from Round 3, despite having filed taxes with updated information 2 weeks prior. Not a big deal, but just wondering what I should expect or if I need to wait until I file next year.
Where in the CNBC article you linked to does it say unemployment earnings don’t count toward the $1400 stimulus calculation?
I only read that unemployment doesn’t count toward the $150K amount that determines if $10,200 of unemployment is tax-free or not.
The Dans Deal link in the post has it. I also saw in another article:
The IRS clarified on Tuesday that the unemployment benefits will not count toward adjusted gross income, the figure used to determine whether people are eligible for the $1,400 stimulus payment. That means more people will be eligible for the stimulus checks.
https://www.nj.com/coronavirus/2021/03/stimulus-check-update-more-people-will-be-eligible-for-1400-payment-due-to-unemployment-tax-change.html
Thanks for the link. I’m still confused why
Chuck cited the CNBC article but based on this article it seems he is correct.
I just noticed that the NJ article also linked to the same CNBC article
Chuck did. Neither article says that ALL Unemployment benefits do not count toward AGI (although the NJ article seems to imply that). As far as I know, only the 1st $10,200 won’t count. Do you see proof otherwise?
I don’t see anything that shows that all UI income is excluded from the calculation of $150,000 for the stimulus checks. But since I am well below that amount in 2020 due to covid killing my self employment, I haven’t looked for it either. 🙂
They have provisions for what counts in other areas: UI doesn’t count with SNAP, the UI boost doesn’t affect Medicaid, etc. It’s possible that the IRS would exclude all of it for the purpose of the stimulus but I haven’t seen guidance on that specifically.
I’m confused by your reply. That is what I have been saying and you disagreed with me.
BTW, the AGI limit to receive the entire $1400 stimulus is $75K, not $150K.
I still don’t understand @chucksithe’s update. He had already reported the $10,200 of tax-free unemployment for people making under $150K in 2020 so the CNBC article didn’t really change anything related to the stimulus. Do you understand it?
BTW, it’s a moot point anyway. If you received less than the full $1400 stimulus based on your 2019 or 2020 taxes you will only get more of it back when filing in 2022 for your 2021 taxes if it’s less.
I just looked through the article on Dan’s Deals. It seems he had the same inference I did. He only deducted $10,200 from the AGI for the stimulus calculation.
Can anyone else weigh in here to see if you agree with
Jack (and 
Chuck) or me (and Dan)?
“Scenario 3:
Couple made $170,399 AGI including $40K in unemployment compensation for one spouse only.
Unemployment compensation test: $170,399 AGI-$40,000 unemployment compensation=$130,399. As this is under $150,000, the couple qualifies for $10,200 in unemployment compensation being non-taxable.
Stimulus test: $170,399 AGI-$10,200 qualified unemployment compensation=$160,199 taxable income. As this is over $160,000, the couple does not qualify for any stimulus check.”
I see your point. But I suppose both the $1,400 stimulus checks and the $10,200 unemployment reduction would use the same $150,000 threshold. It’s possible I’m misinterpreting something.
I can’t worry about these funds. I just hope my efforts for additional income pan out, and that I have the strength to work 12 hours on my feet overnight after so much sedentary activity. The cost of gas is biting into my budget.
But my health is almost enviable, and I’m grateful.
I’d truly be rich now if I were able to avoid taxes like the professional parasites. Trump received a $72.9 million refund! His lawyer said Trump “could not believe how stupid the government was for giving someone like him that much.” Trump paid no income taxes in 10 out of 15 years beginning in 2000 according to the NYT. My daughter when she was 16 was paying more taxes than the chief-parasite ever paid then. And while barely surviving, driving an ancient car, I had paid at minimum $100 a week in cumulative taxes during all of my formative years. We were taxed up the gazoo!
Cool story, bro.
Keep writing it on the chalkboard until you realize it.
Trump is not the president anymore…
(Repeat)
LOL
Why President Biden can’t REPLACE the Grifters and Thieves and Perennial Troublemakers posthaste I just don’t know. Speaks to a lack of leadership.
See how that works? No cult-like devotion.
On the last Covid relief package:
“Qualified persons impacted by Covid can claim they had a Covid-related retirement distribution even if they took the distribution out for some other reason. The withdrawal can be anytime in 2020, even before Covid was declared a problem” I got the details from IRS form 8915-E.
The details of this part of the legislation have barely been covered in the media. I guess it isn’t exciting as a stimulus check. I’ve been saving some impacted clients thousands in early withdrawal penalties due to this. I’m certain many people whom took withdrawals in 2020 are paying too much because neither them nor their tax person realize their circumstances qualify. The legislation is extremely generous. While not everyone qualifies, the vast majority of persons do.
Note: I sent in a detailed email a while back to Will. It might have gone to spam or I might not have explained it well.
i have some questions regarding this, I cant wrap my mind around, I wonder if you are avail for guidance
Sure just post your question or email here.
Any 2020 distribution qualifies if anyone living in the household has a had a financial impact from Covid, got Covid, cared for someone with Covid, etc.
Early withdrawals from a retirement account are always a bad idea IMHO. It should be a last ditch-losing-your-home/car/medical-situation. I’m glad the media didn’t publicize it much so it wouldn’t enter people’s minds. But some people were put in those type of situations sadly. I do wish, however, the media would have publicized that RMD wasn’t required this year. Saved my mom a ton of taxes by not having to withdraw.
I agree it’s a bad idea. People are oftentimes shocked when the tax bill comes on these things. – And they still have to pay taxes on these withdrawals, just not penalties.
I’m sure many people did what they believed to be necessary. At this point publicizing doesn’t matter since the withdrawals had to be in 2020. It’s worth people knowing if they qualify and don’t end up paying more taxes than they have to.
Some part of me wants to think the lack of information is intentional and that part of the bill is meant to help elected official’s wealthy friends. Realistically something that could greatly benefit some people isn’t as “newsworthy” as giving practically everyone a sack of money.
They are still using AGI including taxable unemployment for stimulus checks. The unemployment calculation uses its own threshold which operates as a financial cliff. (IE 150,000 AGI and all unemployment is taxed. No phase out.). So they aren’t looking at any unemployment in determining whether they are eligible for the $10,200 benefit.
Half of my family’s stimulus was directly deposited into my SoFi Money account last week. The other half was deposited this week, and then the transaction was reversed a few hours later before I could touch it. Called SoFi to see what was up and apparently the IRS decided to take it back and are sending it by check instead. No idea why.
Apparently SoFi Money’s routing number changed last year and that might cause issues with the IRS direct deposits making it into people’s Sofi Miney accounts. Though if some of your family’s stimulus direct deposits made it into your account and some did not, then there is probably another reason (or maybe a different, but related reason).