The American Rescue Plan Act of 2021 authorized the third round of Economic Impact Payments (EIP3) as a form of financial relief to eligible individuals and families amidst the ongoing COVID-19 pandemic. This payment, also known as the third stimulus check, differs from the previous two rounds in several key aspects, including eligibility criteria, payment amounts, and dependents’ coverage.
Key Differences from Previous Payments
1. Advance Payment of 2021 Recovery Rebate Credit:
Unlike the first two payments, which were advance payments of the 2020 Recovery Rebate Credit, the third payment is an advance payment of the 2021 Recovery Rebate Credit. Individuals who did not receive the first or second payments or received less than the full amount may be eligible to claim the 2020 Recovery Rebate Credit by filing a 2020 tax return.
2. Increased Payment Amounts:
The third payment provides larger amounts to eligible individuals compared to the previous payments. Eligible individuals who filed a joint tax return will receive up to $2,800, while all other eligible individuals will receive up to $1,400. Additionally, there is a payment of up to $1,400 for each qualifying dependent claimed on the tax return.
3. Expanded Dependent Eligibility:
Unlike the first two payments, which were restricted to children under 17, the third payment extends eligibility to all qualifying dependents claimed on the tax return. This includes older relatives such as college students, adults with disabilities, parents, and grandparents.
4. Adjusted Income Phase-Out Amounts:
The income phase-out amounts for the third payment differ from the previous payments. Taxpayers will not receive a third payment if their Adjusted Gross Income (AGI) exceeds $160,000 for married couples filing jointly or qualifying widow(er)s, $120,000 for heads of household, or $80,000 for other filing statuses.
5. Supplemental Payments:
The third payment is based on the taxpayer’s latest processed tax return from either 2020 or 2019. If the taxpayer’s 2020 return has not been processed, the IRS will use the 2019 tax return information to calculate the third payment.
If the third payment is based on the 2019 return and is less than the full amount, the taxpayer may qualify for a supplemental payment. After the 2020 return is processed, the IRS will automatically re-evaluate the taxpayer’s eligibility using the 2020 information. If the taxpayer is entitled to a larger payment, the IRS will issue a supplemental payment for the additional amount.
Eligibility Criteria
To be eligible for the third Economic Impact Payment, individuals must meet the following criteria:
- Be a U.S. citizen or U.S. resident alien
- Have a valid Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Not be claimed as a dependent on someone else’s tax return
- Have an AGI below the phase-out income limits
Payment Amounts
The amount of the third Economic Impact Payment varies depending on the taxpayer’s filing status and the number of qualifying dependents. The maximum payment amounts are as follows:
- $2,800 for married couples filing jointly or qualifying widow(er)s
- $1,400 for single filers and married individuals filing separately
- $1,400 for each qualifying dependent
How to Receive the Payment
Most eligible individuals will receive the third Economic Impact Payment automatically. The IRS will use the information on the taxpayer’s most recent tax return to determine eligibility and issue the payment. Taxpayers who have direct deposit information on file will receive the payment that way. Those without current direct deposit information on file will receive the payment as a check or debit card in the mail.
The third Economic Impact Payment provides financial assistance to eligible individuals and families during the ongoing COVID-19 pandemic. The payment amounts, eligibility criteria, and dependent coverage differ from the previous two rounds of payments. Individuals who meet the eligibility requirements should expect to receive the payment automatically. Those who have not received the payment or received less than the full amount may be eligible to claim the 2020 Recovery Rebate Credit by filing a 2020 tax return.
2021 IRS Economic Impact Payments on Your Tax Account
FAQ
How much was the 3rd stimulus check?
What is the economic impact 3rd payment?
How was the third economic impact payment calculated?
Can I still claim my 3rd stimulus check?
When will a third round of economic impact payments be issued?
The American Rescue Plan Act of 2021, signed into law on March 11, 2021, authorized a third round of Economic Impact Payments and required them to be issued by December 31, 2021. The IRS began issuing these payments on March 12, 2021 and continued through the end of the year.
What is a third-round economic impact payment?
IR-2022-19, January 26, 2022 — The Internal Revenue Service announced today that all third-round Economic Impact Payments have been issued and reminds people how to claim any remaining stimulus payment they’re entitled to on their 2021 income tax return as part of the 2021 Recovery Rebate Credit.
How much is the 3rd economic impact payment worth?
The third economic impact payment is worth up to $1,400 per individual and dependent. Single filers earning an adjusted gross income (AGI) up to $75,000 and heads of household earning up to $112,500 will receive $1,400, and married couples earning up to $150,000 are eligible for $2,800. Those taxpayers will also receive $1,400 for each dependent.
How much is an economic impact payment?
Eligible individuals for whom the IRS has information to make a payment will automatically receive an Economic Impact Payment of up to $1,400, or $2,800 for married couples filing jointly, plus $1,400 for each qualifying dependent.