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Stimulus update: $1,400 checks, income limits, tax tie-in, House set to vote

The House is teeing up a vote on Friday for the $1,400 checks, which if approved could go out as soon as next month. We've got answers to your questions on the new stimulus payment.

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Following the ins and outs of stimulus checks is hard. We're here to help.

Angela Lang/CNET

With the first and second stimulus checks already out and a possible third paymenton the way, there is a lot to keep track of if you qualify for a payment. And to make things even more confusing, it's now tax season, which this year is connected to your payment.

To begin with, on Friday, the House of Representatives intends to vote on its version of the American Rescue Plan Act. Although the $1,400 check amount included in the bill has been set for at least a month, other elements, such as who would and wouldn't qualify for the third round of stimulus money, have been up for debate. Next, the IRS, which already has a full plate with the start of tax season, is processing claims for stimulus money owed from the first and second checks via a rebate credit on this year's federal tax forms. (Here's how the IRS sending a third check during tax time could affect you, even if the IRS postpones your filing deadline this year.)

To help make sense of it all, we look at key stimulus check details as the payments head toward approval. We'll tell you everything you need to know about how some rules have changed (around garnishment, for example) and when it's time to file a payment trace for your missing stimulus money. (Here is how the three stimulus checks compare too.) This story is updated frequently with the latest information. 

The House is close to a vote on $1,400 checks, with changes to income limits

The third stimulus check for $1,400 is set to clear a major hurdle this Friday. House Democrats by the end of the week plan to bring to a vote the $1.9 trillion rescue package that would authorize the checks. "The American people strongly support this bill, and we are moving swiftly to see it enacted into law," House Majority Leader Steny Hoyer tweeted Tuesday evening, confirming the vote. After the House passes the legislation, it will move over the Senate and then finally to President Joe Biden to sign by March 14, if Democrats keep to their compressed schedule for the bill.

Congressional Democrats are pressing to hit that mid-March date before some federal pandemic-assistance programs begin to expire, including expanded unemployment benefits that end by the middle of the month. To meet that aggressive deadline, the House and Senate still need to nail down many details concerning the third payment, including who would qualify for the money and how soon the IRS could start sending the checks once approved. 

After considering lowering the income limits to target payments, House Democrats have settled on a plan that would follow the income-requirement outlines used for the first two checks but set an upper cap to cut off payments to higher earners. Under the current House Democrats' plan, individuals with an AGI (adjusted gross income) of $100,000 a year would be excluded from receiving a payment. Heads of household earning $150,000 a year and couples earning $200,000 would also be above the upper limit to qualify for any money.  

See our calculator for the third stimulus check to get an estimate for how you and your family would do under the plan.

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How Democrats will speed approval of the third round of payments through Congress 

Working toward a mid-March date for approval, Congressional Democrats are using a powerful, little-used tool called budget reconciliation to speed passage of the economic rescue bill. The reconciliation process allows the Democrats to bypass opposition to the legislation but there are strict rules about what budget items can and can't be included in the bill. For example, House and Senate Democrats are working through whether they can include a hike to the minimum wage as part of the bill.

Tax season 2020 is important for stimulus checks, even if you're not usually required to file

Tax-filing season this year carries an extra burden for those who qualify for the first, second or potentially third stimulus checks -- and that's whether you are required to file taxes or not. The IRS uses the federal tax system to decide things like how much money you should get in your stimulus checks (based on your AGI), how quickly it can send your next payment and even if you should get a catch-up payment (it'll be faster if you set up direct deposit with the IRS and do your taxes soon).

The third payment looks like it could be based on either your 2019 or 2020 tax filing, which may complicate the situation for some.

If your first or second payment hasn't arrived or if any amount is missing, the IRS will also use your 2020 taxes to reconcile the difference -- but only if you file for a Recovery Rebate Credit as part of a tax return. Again, that even applies to nonfilers, people who aren't typically required to file income tax. Here's our primer on everything stimulus check and taxes and some of the rules and exceptions you should know about. Another possible complication: The IRS could decide to delay your filing deadline this year.

One more thing: If you got a letter from the IRS saying the money was sent, but you never got your funds, you may need to set up a payment trace rather than apply for the IRS' rebate credit.

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With three stimulus checks, it's hard to keep the details straight.

Sarah Tew/CNET

A third stimulus check could go even faster than the first two did

Congressional Democrats are pushing to send out the third round of payments quickly, possibly before the end of March. If the new bill becomes law by March 14, the IRS could start making payments within days -- as it did with the second round of checks -- now that it has a system in place for processing the payments. Here's what a payment timeline could look like.

More types of people could qualify for a third stimulus check -- but fewer could, too

The House stimulus bill expands who qualifies for a check and includes at last two groups left out of the first payments: dependents of any age and families with mixed-status citizenship (meaning some members are not US citizens).

But the current bill also excludes some who may have qualified for a payment with the first two checks. Congress has settled on the third stimulus check coming with a per-person maximum of $1,400. But they are looking at setting a cap on the upper income limit to qualify for a payment, which would mean some in the upper-income category may not receive any money at all, for themselves or their dependents.

If you are curious, here are the details of the mathematical formula Congress is looking at to set payments.

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The path between you and your stimulus check money may not be straight.

Sarah Tew/CNET

Your stimulus check rights improved with the second round -- but not without exceptions

Usually, stimulus dollars are yours to spend or save as you please. You can't be compelled to spend your proceeds on rent, car payments, back taxes or debt -- or even unpaid child support. But some of the rules changed for the second check that went out in January.

The government's Taxpayer Advocate Service, which works with the IRS, has pointed out that anyone claiming a Recovery Rebate Credit for catch-up stimulus money is not automatically protected from garnishment.

It isn't clear whether anything would change for a third check. And there is still an exception that allows at least one entity to garnish your stimulus money. Make sure you know your stimulus check rights.

Stimulus check rules and exceptions are pretty complicated

With stimulus checks, the small details and exceptions can be dizzying. While some situations are easy to decipher, others concerning you and your dependents might make it unclear if you're eligible, how much money you may receive and if there's anything extra you have to do to claim your money.

For example: