President Joe Biden signed the American Rescue Plan on March 11, a $1.9 trillion relief package that includes cash payments for every American earning less than $80,000, and married couples earning less than $160,000. There are also cash payments for parents of dependent children, and expanded tax credits for those children as well.
How much should you expect to receive? If your adjusted gross income is $75,000 or less, or $150,000 or less for a married couple filing jointly, expect to get $1,400 each for you and your spouse, $1,400 per child for dependent children up to age 23, and $1,400 for any other dependents you claim on your taxes, such as an elderly relative. If you make more than $75,000 but less than $80,000 in adjusted gross income, or you and your spouse make more than $150,000 but less than $160,000, you'll still get a payment, but it will be smaller. If these rules seem at all confusing, here's a handy calculator created by Kiplinger that will tell you exactly how much to expect.
But wait, there's more. The stimulus bill also expands the child tax credit from $2,000 to $3,000, or $3,600 for children under six years old, for one year. The credit is now fully refundable, meaning you can collect it even if you don't owe any taxes. The child and dependent care tax credit, which parents and caretakers can use to offset part of their expenses for caring for dependents, has been expanded as well.
As soon as tomorrow
When can you expect your payment to arrive? As with the first two stimulus payments, you'll get paid fastest if the IRS has bank information on file for you and can direct deposit your payment. And you could see that payment pretty fast! The White House press secretary told The New York Times that direct deposit payments could start appearing in people's bank accounts this weekend. Remember the "Get My Payment" tool from the last two stimulus payments? The IRS will provide information on when to expect your third stimulus payment at that portal, although at this writing it hasn't started doing so yet. Right now it seems entirely possible that you'll get your payment before the portal is ready to tell you when to expect it.
What should you do if you're at or near the income threshold to receive a payment? What if you earned too much to be eligible in 2019, but then your income fell in 2020, as many people's did, and you might be eligible because of last year's income? The IRS will use the most recent tax return it has on file to determine your eligibility for payment, so it will either use 2019 or 2020, depending on whether you've filed your 2020 return yet.
If your 2020 income makes you newly eligible for a stimulus payment but you haven't yet filed your return, you can file right away but don't fret too much. The IRS has until September to review new returns and make supplemental payments where appropriate. If they don't, you can get that money--eventually--by claiming it as a tax credit when you file your 2021 return. The same applies to 2020, by the way. If you were eligible for a stimulus payment or payments last year but didn't receive the money, you can claim it as a tax credit on your 2020 return.
There's a lot more to the American Rescue Plan than stimulus payments, of course. My colleague Diana Ransom has dug into what the bill means for small-business owners, but there are also many provisions that might directly affect your personal finances. Among them: Student loan forgiveness is no longer taxable as income beginning this year and continuing through 2025. That could be a very significant benefit if President Biden follows through on his plan to erase $10,000 of debt for student borrowers. The ARP continues supplemental unemployment payments until September, pays for several months of Cobra health insurance for people who've lost their jobs, and lots more. It's worth spending a few minutes learning the details of this bill. Chances are at least one of its provisions will affect your employees and you.