The Senate began working on the approval of the new targeted income limit, which would disqualify up to 16 million people, The Hill reported. This new amendment will be the determining factor the IRS uses for the size of your next payment -- the IRS also had different formulas for the . Will this income change make you eligible for the full , , or will you get ?, with changes already made to the income cutoff for for the . President Joe Biden has expressed his
The IRS will need to modify its calculations onceand Biden signs it into law. Certain and will need to be clearly defined -- these will be much . As we've learned from the past, any details could change again -- but the , plus the new Senate amendments, give us enough details to go on for now.
If the new check amount stays as is, a family of four could get $5,600, versus the maximum $2,400 they received from the. We'll help explain how it works below. For more information about the stimulus check, here are the today, including the and what could happen when and if a . This story is updated regularly.
Stimulus check formula: Important information to remember
Before we dig into what may change for a potential third stimulus check and what the outcome would mean for you, here's how it works. In general,is one of the most important factors in determining your stimulus check total. The other factors include your adjusted gross income, or , and the stimulus check formula. You can still if you're a too.
The major variables the IRS plugs into the stimulus formula are:
- Your per your .
- Upper limits for single taxpayers, heads of household (for example, a single person with at least one child) and married couples filing jointly.
- The number of you claim.
- "Reduction" or "phase-out" rate -- the amount your total would drop for every $1,000 you make above the income limit that allows you to qualify for the full check amount. In other words, the IRS calculates a partial payment if you don't qualify for the full amount.
How the third stimulus payment targets your income even more this time
The recent proposal to "target" the $1,400 stimulus check would keep the highest earners from receiving a partial payment. If the proposal is adopted, the qualifications would be:
- Full $1,400 amount if you earn less than $75,000 (single taxpayer); $112,500 (head of household); $150,000 (married).
- Disqualified at $80,000 (single); $120,000 (head of household); $160,000 (married).
- Phase-out rate increased to preserve this upper limit.
- These high earners would not receive partial checks even if they have dependents.
Dependents could increase the total amount of your stimulus check
With the previous two stimulus checks approved in March as part of the CARES Act and then in December, it was possible to get a partial payment even if you exceeded the maximum income limit -- if you had dependents. For example, say a married couple with anof $200,000 claimed two dependents. Using the previous formula, from a $1,400 stimulus payment round that family could still get a $600 check.
That's because the previous formula begins with the largest amount you'd be eligible to receive (for example, $1,400 per single taxpayer or $2,800 for joint filers) and adds $1,400 for each qualifying dependent. Then it reduces the total possible sum according to your AGI and the phase-out rate.
It's a little like starting a test with a perfect 100 point score and subtracting a point for every question you miss, rather than starting with zero points and adding them all up at the end of the test.
But in this case, the dependents you name can start you at a higher value, say 110 points in our classroom example. So by the time you subtract "points," you may still get more than people who don't have dependents -- even if your AGI is above the maximum cap. The more child dependents you have, the higher your starting value and the higher your ending value, too.
The proposal to target stimulus checks would set a firm cutoff, which means that it would start by evaluating your AGI. If you're over the limit, it wouldn't matter how many dependents you have. You still wouldn't be eligible for a check.
On the other hand, a family with a large number of dependents and an AGI within the boundaries could still potentially receive a large partial payment, as long as they come in below that absolute upper income limit. You can.
Phase-out and reduction rate: Why they're significant and how they work
A sliding scale is involved here. With the second check, for example, if yourwas less than $75,000 as a single taxpayer (that means no kids), you should have received the entire . If you made more than that, the size of your check would diminish until $87,000, after which point you'd be ineligible.
For the planned $1,400 stimulus check -- things have recently changed -- you might receive the full $1,400 amount if you earn under $75,000 a year (your AGI as a single taxpayer), with diminishing returns up until an $80,000 cutoff. You'd receive a partial check for an AGI between $75,000 and $79,900. Again, you can see the differences in our.
For heads of households and married couples with dependents, these other household members are an important part of the equation -- up to a point (see above).
For more information, here are the top things to. And see how , and people who could also qualify, including families with .