The American Rescue Plan Act of 2021 (Act), with some referring to it as the relief bill, is voluminous and will take some time to understand the full scope. The IRS has begun issuing guidance, which provides help in understanding key provisions, but does not contradict what has been widely published so far about the Act.
The IRS notes that generally, if you are a U.S. citizen or U.S. resident alien, you are eligible for the full amount of the third Economic Impact Payment if you, and your spouse if filing a joint return, are not a dependent of another taxpayer and have a valid Social Security number. There is an exception when married filing jointly and your adjusted gross income (AGI) does not exceed:
- $150,000 if married and filing a joint return or if filing as a qualifying widow or widower.
- $112,500 if filing as head of household.
- $75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.
Payments will be phased out, or reduced, above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds:
- $160,000 if married and filing a joint return or if filing as a qualifying widow or widower.
- $120,000 if filing as head of household.
- $80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.
For example, according to the IRS, a single person with no dependents and an AGI of $77,500 will normally get half the full amount, a $700 payment. A married couple with two dependents and an AGI of $155,000 will generally get a payment of $2,800, again, half the full amount.
Eligibility and Filing
Most eligible people will get the third Economic Impact Payment automatically and will not need to take additional action. The IRS will use available information to determine eligibility and issue the third payment to eligible people who:
- Filed a 2020 tax return.
- Filed a 2019 tax return if the 2020 return has not been submitted or processed yet.
- Did not file a 2020 or 2019 tax return but registered for the first Economic Impact Payment using the special Non-Filers portal last year.
- Are federal benefit recipients as of December 31, 2020, who do not usually file a tax return and received Social Security and Railroad Retirement Board benefits, Supplemental Security Income (SSI) and Veteran benefit recipients in 2020. The IRS is working with these agencies to get updated information for 2021 to assist with stimulus payments at a date to be determined.