More Stimulus Checks Are on the Way, Along With More Aid for Families—Here’s What You Can Expect
The first checks may go out as soon as next week.
The last year has been packed full of tragedies large and small, but Americans struggling with the double crises of the pandemic and economic challenges haven't been completely without support. Like many other wealthy countries, the U.S. government has passed a series of legislations, namely the CARES Act and the December 2020 stimulus package, to help its citizens struggling right now—and while U.S. support hasn't quite reached that of some other countries, aid is aid.
A third round of aid is imminent: Dubbed the American Rescue Plan, this $1.9 trillion COVID relief bill championed by President Biden has passed the Senate and the House of Representatives, and was signed into law by the president on Thursday, March 11.
Like other aid packages, this one includes stimulus checks for eligible residents, extended unemployment benefits, and more measures intended to help people financially—but it also includes new rules about tax credits, additional funding for efforts to fight coronavirus and vaccinate people, and more. There's a lot packed into this enormous act, but there are a few standout aspects that will have an almost immediate impact. Here's what you need to know.
$1,400 stimulus checks are coming
This third round of stimulus checks is larger than the other two (which were $1,200 and $600, respectively) and has new rules surrounding who is eligible. Single filers with an adjusted gross income (AGI) of $75,000 or less are eligible for the full $1,400, as are heads of household with an AGI of $112,500 or less, and married couples with a joint income of $150,000 or less. Payments phase out for those making more than those figures, and stop completely at $80,000 for single filers, $120,000 for heads of household, and $160,000 for joint filers. (Previous stimulus checks phased out at higher income levels.)
Parents or heads of households will receive $1,400 payments for each of their children, too. College students will also count as eligible dependents (so their parent taxpayer will receive $1,400 for them), as will older relatives claimed as dependents.
Eligibility is determined by 2019 income, unless you’ve filed your 2020 taxes already—if you have, it will be based on your most recent return. If you’ve lost income since 2019 and are ready to file your taxes, filing your taxes now might make it possible for you to receive those checks; if not, you will likely be able to get a credit on your 2021 taxes next year.
Payments may begin arriving as soon as the week of March 15. After the last round of aid was passed, the first round of payments were distributed within days—it may be possible for the IRS to distribute these payments just as quickly.
If you received the last two rounds of stimulus money, you don’t need to do anything to receive these $1,400 checks. And if you were eligible but didn’t receive the money, you can claim it as a credit on your 2020 taxes.
The annual child tax credit is higher—and available as an advance tax refund
The child tax credit, typically worth up to $2,000 per eligible child per year, is now worth as much as $3,000 per child aged 6 and older and $3,600 for children aged 5 and younger. Children as old as 17 are also eligible for the credit—the cut off was previously 16.
For 2021 only (unless these features are made permanent), the credit is also available as an advance on your 2021 taxes. Instead of receiving a larger tax refund or smaller tax bill in the 2022 tax season, you can cash in (so to speak) on the credit starting in July 2021, receiving half of the money over the next few months. Payments may be made monthly, though that aspect is not yet clear. Essentially, the credit will work as a regular payment to help support families with children through the rest of the year. Families can opt out of the advance payments, if you wish.
If you’re eligible for the full stimulus check amount—earning $75,000 or less as a single filer, $112,500 as a head of household, or $150,000 as a couple filing jointly—you will receive the full value of the adjusted child tax credit (half as an advance and half to be claimed on next year’s tax return). Benefits phase out at incomes above those levels.
The bill for the American Rescue Plan requires that an online portal be established where tax payers can opt out of receiving the advance payments and update information about their income, number of qualifying children, and more—if you typically receive this benefit, keep an eye out for more info about this portal so you can take any necessary action when possible.
The child and dependent care tax credit is increased
Parents and taxpayers with any dependents know the child and dependent care tax credit well: It allows parents and caregivers to offset the cost of care for children and other dependents. For this year only, the credit has been increased: It’s worth up to $4,000 for one dependent or $8,000 for two or more. The credit is calculated based on a percentage of the value of eligible expenses and income—higher earners can claim a lower percentage, and lower earners can claim a higher one, up to 50 percent.
Unemployment benefits are extended
The federal government began paying supplemental unemployment benefits on top of those offered by the states last March, and those benefits (at varying amounts) have been continued yet again. Those receiving unemployment benefits will be able to receive an additional $300 each week, on top of their regular benefit, until September 6.
Not all unemployment benefits are taxable
In most years, money received through unemployment benefits are taxable, meaning that if you don’t set any aside to pay taxes later, you’ll owe the IRS come tax season. 2020 benefits are still taxable, but the American Rescue Plan allows the first $10,200 of benefits received in 2020 to be tax-free for those with incomes of less than $150,000. If you received more than $10,200 in unemployment benefits, you will owe taxes on that money—but not all of the money you received.