What to Know About the Next Stimulus Check

The coronavirus pandemic has dragged on for nearly a year now, upending every aspect of life. Many families continue to struggle financially during these turbulent times, and lawmakers are currently planning another coronavirus relief bill to provide stimulus checks and other relief.

The upcoming stimulus payment will be the third direct payment aimed at minimizing the financial damage of COVID-19 for individuals and families. Here's what you need to know about it.

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The U.S. House of Representatives is drafting legislation based on a plan laid out by President Joe Biden shortly before he was inaugurated. The legislation includes $1,400 stimulus checks for eligible U.S. adults.

This will be the largest payment Americans have received. The CARES Act provided $1,200 per adult, and the stimulus plan that passed at the end of December provided a payment of $600 per adult.

The $1,400 payment isn't just an arbitrary number. When December's relief bill was passed, then-President Donald Trump tweeted that Congress should authorize $2,000 checks because the $600 they'd allotted wasn't enough.

Congress didn't take the president up on his plan at the time, as most Republicans weren't on board with offering such large checks. But Democrats began campaigning on the promise of a $2,000 check.

The $1,400 payments they're providing now are their attempt to fulfill that campaign promise. The upcoming payment is meant to combine with the $600 from December's bill to provide $2,000 total.

ALSO READ: Biden Says He's Working on a Coronavirus Aid Package That Would Include $2,000 Stimulus Checks

The third stimulus check will include a payment of $1,400 for eligible dependents -- the same amount as adults receive. The CARES Act had authorized just $500 per dependent, which was less than the $1,200 adults were eligible for.

And while both adults and dependents received the same $600 payments in December's bill, a $1,400 per-dependent payment will be the largest amount received for this group.

Both of the past two stimulus checks excluded adult dependents. Only children under 17 qualified. This is reportedly not going to be the case with the next bill. Taxpayers who claim adult dependents will get the payment for them as well.

Previously, adult dependents weren't allowed their own payment because they were claimed as dependents. But those who claimed them didn't receive the funds earmarked for dependents, either. That meant a large group of people -- including many college students -- were entirely left out. That won't happen this time.

Some lawmakers had floated the idea of lowering the income threshold to receive the full third payment. That's not going to happen. Like with the prior two stimulus checks, the full payment will be available to:

• Single tax filers with up to $75,000 in income;
• Heads of household with up to $112,500 in income; and
• Married couples filing jointly with up to $150,000 in income.

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Although income limits for full checks stay the same, the rules at which payments phase out will be changed. That's because some lawmakers were concerned the existing phaseout rules could mean high earners received money this time around.

The new legislation is expected to impose a strict income cap to make sure this doesn't happen. In fact, under the plan as written, you will no longer be eligible for stimulus money (for yourself or any eligible dependent) if:

• You're a single tax filer with an income above $100,000;
• You file as head of household with an income above $150,000; or
• You file as married filing jointly with an income above $200,000.

ALSO READ: Here's How Income Limits Will Work for the Third Check

Despite stricter income limits that cut off high earners, most people will still receive at least some money when Washington lawmakers sign the next stimulus check bill.

In fact, as many as 91% of Americans are on track to get a payment under Biden's stimulus plan -- including 84% who will get the full amount.

While it will take time for lawmakers to get their legislation passed and for the IRS to gear up to send payments, Congress is hoping to get the money quickly into people's bank accounts so they can use it when they need it.

If all goes according to plan, payments will likely start to arrive in mid-March or early April.

The IRS has already delivered stimulus checks to most American households, so they have the mechanisms in place to do it again. As a result, most people will not need to do anything in order to receive the third payment. The IRS will just send the money to the same bank account or mailing address they delivered the last two payments to.

If the IRS has your bank information on file, your payment will be sent via direct deposit. This is the quickest and most efficient way to get the money. In fact, those who received direct deposit payments got the first stimulus checks days or weeks before individuals who received their payments via mail.

If the IRS doesn't already have your bank details, try to provide them when you submit your 2020 tax returns so they'll be able to directly deposit your funds.

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The IRS based the delivery of the first stimulus payments on 2018 or 2019 tax returns, depending when these returns had been filed. But tax filing season for 2020 opens in mid-February.

If you experienced a reduction in income in 2020 that makes you eligible for a larger stimulus payment than you'd received based on your 2019 income, aim to file your returns as quickly as possible. That way, if the IRS uses your 2020 return when calculating your payment, you should get a larger sum.

If your income is higher in 2020 than in 2019, though, and the change could affect your check, you may want to wait to submit your return until after your stimulus payment is delivered.

ALSO READ: How to File Your Taxes: A Beginner's Guide

While many people are focused on stimulus checks, Biden's relief plan contains some other provisions, including an increase in the federal minimum wage to $15 per hour and boosted unemployment benefits.

Biden's plan would also temporarily expand the child tax credit for 2021. This credit is currently valued at up to $2,000 and is only partly refundable. But under current versions of the stimulus plan, it would be increased to $3,600 for children under 6 and $3,000 for older kids, and it would be made fully refundable.

Depending on your situation, some of these other provisions in the bill may actually be more valuable to you than the single $1,400 check.

Each of the COVID-19 stimulus payments are simply an advance on a tax credit. That means that if you didn't get the full amount of the first two payments -- or you somehow don't receive the correct amount of the third one -- you can file a tax return to claim it.

You can claim the $1,200 CARES Act payment or the $600 payment from the December relief bill by filing a tax return for the 2020 tax year. The IRS will start accepting these returns in mid-February.

The third check, however, is being issued in the 2021 tax year, so you'd have to wait to file your 2021 taxes to claim it on a return if for some reason you're unable to get the tax credit advance.

Since the stimulus money is an advance on a tax credit, it's not taxable. You don't have to include either of the first two checks in your income for 2020, and you won't have to include the third check in your 2021 income.

Odds are good you'll be getting another stimulus check. Democrats don't need Republican votes to pass legislation providing one, as they have a majority in both the House of Representatives and Senate.

Normally, legislation in the Senate would require 60 votes to overcome a filibuster. However, through a procedure called reconciliation, it can pass with just 51 votes. As long as they don't lose any votes from their caucus, Democrats can muster those votes with Vice President Kamala Harris serving as the 51st vote.

However, if any conservative Democrats vote no, the current proposal will be unlikely to be signed into law.

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If you're hoping for more stimulus money, keep your eyes on Congress in the coming days and weeks. You can watch for news of the legislation being drafted and wait for the House and Senate to pass a bill that President Biden is all but certain to quickly sign.

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