(CBS Detroit) – A third stimulus check seems to be becoming more and more certain by the day. As the economic toll of the ongoing COVID pandemic continues to soar, President Joe Biden and politicians on both sides of the aisle are backing more money into Americans’ pockets as soon as possible. Although an allowance seems likely, how many and when are still in question.
A $ 1,400 stimulus check is part of the $ 1.9 trillion support package proposed by the Biden government. The US bailout plan, as it stands, would also include increased unemployment benefits, an improved child tax credit, and additional support for millions of Americans in difficult economic conditions as a result of the ongoing COVID-19 pandemic. Democrats control both houses of Congress and have indicated their willingness to pass stimulus legislation through a direct party line vote if needed. They have also paved the way for budgetary reconciliation, which would allow them to bypass the filibuster in the Senate and pass a stimulus with a simple majority.
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The $ 1,400 number that has received so much attention seems destined to become a reality. But the actual amount reaching people’s bank accounts can change based on income threshold, number of dependents, and other factors.
Last week, a group of 10 Senate Republicans made a $ 618 billion counter-offer on the US bailout. Their package would cut the direct payment to $ 1,000 and limit annual receipts for recipients to $ 40,000, after which the stimulus check amount would drop incrementally to $ 0. Late last week, the president rejected the idea of cutting the amount. “I’m not going to accept the checks,” Biden stressed on Friday. “They’ll be $ 1,400, period. That’s what the American people were promised. “
However, the idea of lowering the annual income requirement has gained steam.
The previous two incentive checks were phased out for individuals with an adjusted gross income (AGI) of more than $ 75,000 per year and married couples with an AGI of more than $ 150,000. (AGI is the total of your wages, interest, dividends, alimony, retirement benefits, and other sources of income minus certain deductions, such as student loan interest, alimony payments, and retirement contributions.) For every dollar of income above the threshold, the previous two incentive payments went by five percent down. So the $ 1,200 payment of the CARES Act shanked to $ 0 for income in excess of $ 99,000 ($ 198,000), and the $ 600 from the second stimulus shrank to $ 0 for income in excess of $ 87,000 ($ 174,000). ).
Biden’s administration is considering lowering the income threshold to $ 50,000 ($ 100,000). Using the same five percent formula, a payment of $ 1,400 ($ 2,800) would actually be $ 700 ($ 1,400) with an annual income of $ 64,000 ($ 128,000) and $ 0 with an annual income of $ 78,000 ($ 156,000) .
The rationale behind these kinds of changes is to ensure that more money is spent in the wider economy rather than saved. According to a study by the Federal Reserve Bank of New York, the average percentage of the first stimulus payment a household spent on essentials decreased as income increased. The average percentage of the first stimulus payment a household saved increased as income increased. While lowering the income threshold would better target the economy, it would also reduce the number of people receiving a third stimulus check and the amount received by others.
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A recent Democratic proposal kept the income limit at $ 75,000 ($ 150,000) and the upper limit at $ 100,000 ($ 200,000). Under this setup, one was $ 1,400 ($ 28,000) while income rose to $ 100,000 ($ 200,000). The issue is still largely undecided.
Dependent children can also affect the size of your next stimulus check. The second stimulus check included $ 600 per dependent child. A dependent child means anyone under the age of 17 who lives in your household. There was no limit to the number of children. And in view of the phase-out, that $ 600 was added to the adult (s) total. For example, an adult who had two children would have received $ 1,800 in January if her AGI was less than $ 75,000. That amount would have dropped to $ 1,200 at an AGI of $ 87,000; $ 600 with an AGI of $ 99,000 and $ 0 with an AGI of $ 111,000.
The American Rescue Plan seeks to expand the pool of eligible dependents to those over the age of 16. That group would include students and older adults with certain types of disabilities. Such a change could make an estimated 13.5 million more people eligible for incentive checks.
The amount of a third stimulus check can also be affected by a recipient’s taxes. To speed up distribution, the Internal Revenue Service has used the most recent tax returns to establish AGI and thus qualify. AGI changes from year to year as people receive pay increases, change jobs or become unemployed. The first lump sum payment was accepted in March 2020. At the time, some people had filed their 2019 taxes and others had not. So the amount of the check could have been based on 2018 or 2019 taxes. The second lump sum came into effect in December 2020, after nearly everyone filed their 2019 taxes. That amount was thus determined by the tax returns in 2019.
The third aid payment could be signed early to mid-March 2021. At that point, some people will have filed taxes for 2020, some will not. That means that a third payment could be based on 2019 or 2020 taxes. The past year has seen significant unemployment, often hurting individual households’ finances. If someone’s AGI changes significantly from one tax return to another, the amount of their next incentive can also be monitored.
When can that third stimulus check come? The goal of the government is to sign the US bailout plan into law by March 14. That’s also when the current $ 300 federal unemployment benefit ends. Assuming President Biden is able to sign the aid package on March 14, direct deposits are likely to begin the week of March 22, with checks beginning to arrive the week of March 29.
However, House Speaker Nancy Pelosi appears to have an even more aggressive timeline. According to comments from Friday, she wants to achieve the US bailout within two weeks. The Senate could then pass it through a straight party line. In this scenario, the stimulus package could pass through Congress on Feb. 26 and be signed into law on March 1. Direct deposits would start arriving in bank accounts on March 8, and checks would be sent on March 15. Both timelines could be extended due to the ongoing impeachment lawsuit in the Senate or some other reason.
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Originally published at 2:46 p.m. ET on Thursday, February 11, 2021.