New Stimulus Update! Will You Get It?
$1.9 trillion. That’s how much money the government is injecting into the economy with the latest stimulus package known as the American Rescue Plan Act of 2021 (ARPA). Washington has now provided about $6 trillion in total economic relief during the coronavirus pandemic.
Here at Nelson Financial Planning, we are skeptical that spending this much money is necessary to get the economy going again. After all, household savings are about triple what they were prior to the pandemic, so it’s doubtful that throwing more cash at Americans is necessary to stimulate economic activity.
Let’s see if we can unpack and make sense of this $1.9 trillion bill.
$410 billion is allocated for economic impact payments, also known as stimulus checks. Every eligible American will receive $ 1,400. If you have direct deposit set up with the IRS—either from prior tax returns or the previous two rounds of stimulus checks you should have received your payment by now.
The phase-out rates for the stimulus checks are very compressed this time around:
- Single filers earning $75,000 or less earn the full amount, with payments phased out at $80,000.
- Head of Household filers earning $112,500 or less earn the full amount, with payments phased out at $ 120,000.
- Joint filers earning $150,000 or less earn the full amount, with payments phased out at $160,000.
To maximize your eligibility for an economic impact payment, you must be aware of your income—not just in 2019 and 2020, but in 2021. Let’s make sense of where you need to be income-wise to make sure you don’t unintentionally go over the limits.
When to File?
The IRS determines your eligibility based on the latest income tax return on file—either 2019 or 2020. To be clear, the stimulus checks don’t count as income. And if you receive a payment and the IRS learns later that you didn’t actually qualify, it can’t take the money back.
If your income in 2019 qualifies you for a stimulus check, but your 2020 income was too high, wait to file until you receive your payment. The filing deadline has been extended to May 17, 2021.