American Rescue Plan Act of 2021: What You Need to Know
Now that the American Rescue Plan Act of 2021 has been passed into law as of 03/11/2021, we now have new details about your 3rd stimulus payments and other important changes that may impact your tax return.
How Much?
The 3rd Economic Impact Payment has been approved for $1,400 for each individual on your tax return (and yes, this does now include any of your dependents regardless of their age).
Who Qualifies?
Your Adjusted Gross Income (AGI) must be under the following amounts to qualify for the full amount of the 3rd Economic Impact Payment:
Single (S) = AGI less than $75,000;
Head of Household (HoH) = AGI less than $112,500;
Married Filing Joint (MFJ) = AGI less than $150,000.
Your Adjusted Gross Income (AGI) can be found on your Form 1040 pg 1 on Line 11. If you need your tax copies, please Submit a Request for Tax Copies.
Dependent Rule Changes
When the 1st and 2nd stimulus payments came out, any dependent over the age of 17 were not counted and included in your payments. However, with the 3rd stimulus check there is no longer a maximum age.
This means that any dependent on your tax return regardless of age will be included in your 3rd stimulus payment and you will receive $1400/dependent.
Estimated Payment Timeline
With the 3rd Stimulus Payments coming out in the middle of this tax year, the estimated payment timeline for the 3rd stimulus payment is a little unclear at this point in time. However, we have provided an estimated timeline to better help you understand when you may receive your payments. Unlike the 2nd stimulus payment where the IRS had only a 2 week deadline to issues payments, they have until the end of the year to issue your 3rd payment.
We anticipate those with Direct Deposit to start receiving their 3rd stimulus payments starting as early as this weekend (03/13/2021).
We anticipate those who are receiving a physical check or a EIP Card to start receiving their payments as early the 4th week of April (04/26/2021) . Though, a more realistic date would be the 1st week of May (05/03/2021) based on the timing of the previous Economic Impact Payments.
What Tax Year is the 3rd Stimulus Based on?
The 3rd Stimulus Payment will be based on your most recently filed tax return with the IRS (either 2019 or 2020 tax years).
Is the 3rd Stimulus Taxable?
No. Like the first and second stimulus payments, the 3rd Economic Impact Payment is not considered taxable income.
Where will my 3rd Stimulus be sent?
If the IRS has processed your 2020 return by the time your stimulus funds are sent, then you will receive stimulus funds through the same method used for your 2020 return.
If the IRS has not processed your 2020 return by the time your stimulus funds are disbursed, then you may receive your stimulus funds based off of the method used for your 2019 return.
Has my 3rd Payment Arrived?
If you are anticipating your 3rd Stimulus payment to arrive at our office as either a physical or EIP Card, you can check the status of your payment by using the following tool below and entering in your unique Customer ID.
In addition, you can visit the IRS website for more information.
In addition to the 3rd Stimulus Check coming out, here are some additional things that may impact you and your tax return:
Unemployment Changes
As part of the American Rescue Plan Act of 2021, many taxpayers won’t be required to pay taxes on up to $10,200 in unemployment benefits received last year (2020).This means that if you received a 1099-G from any state agency, you may not have to pay taxes on a portion of your unemployment benefits.
In order to qualify for this tax break, you will need to have an Adjusted Gross Income (AGI) of less than $150,000.
What if I already filed my 2020 Taxes?
This tax break may result in an increased refund on your tax return, or if you owe, a reduced amount due. We would recommend that if you had unemployment on your tax return and you have already filed to get in contact with us at 505-863-2489 so that we can see what kind of a difference it makes on your tax return.
We may have to amend your tax return, but this a good thing for you! Extra money in your pockets.