The Senate passed a budget resolution Friday morning allowing President Joe Biden’s $ 1.9 trillion stimulus bill to pass without Republican backing. But lawmakers have agreed to limit high earners to receiving the third incentive check of up to $ 1,400, indicating that eligibility rules could be stricter than previous direct payments.
The Internal Revenue Service (IRS) will likely determine whether you qualify for the checks and amounts to be distributed based on people’s latest tax returns. Taxpayers must file their 2020 personal returns by April 15, but those who saw their income drop last year due to the ongoing coronavirus pandemic may want to file earlier to get a larger check. Conversely, those who saw their income rise in 2020 can receive a higher payment if they wait and file after the checks have been distributed.
According to the Senate Finance Committee, Congress is expected to direct administrators to use the last individual income recorded – either 2019 or 2020 – when the checks are ready to be distributed. The IRS begins filing tax returns on Feb. 12, and individuals who file before the checks go out will receive an amount based on their 2020 income returns. Those who file after payments are divided will receive an amount based on their income declaration in 2019.
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Under Biden’s US bailout plan, those who earn more than $ 75,000 receive a lower pay and those with higher incomes can be phased out completely. The Senate recently overwhelmingly approved a two-pronged amendment, led by Senators Joe Manchin of West Virginia and Susan Collins of Maine, to prevent “higher-income taxpayers” from receiving the payments.
Americans will likely have to file their 2020 tax returns in the coming weeks to take advantage of the opportunity to use their last income for the third incentive check. On Friday, the Senate backed Biden’s $ 1.9 trillion stimulus package, with Vice President Kamala Harris casting the binding vote on a budget reconciliation. It will allow Democrats to pass the move quickly without Republican backing.
Congress will now have to pass the amendments to deliver the package, and Pelosi has said the legislation will be passed “absolutely” before March 14 – an unofficial deadline set by Democratic lawmakers to approve further aid.
Pelosi explained on Friday that the party will “begin work on the details of the bill on Monday.” “Hopefully we will send something to the Senate in two weeks and this will be well before the end of the initiatives,” said the House Speaker, adding that Congress will “complete our work before the end of February.”
The IRS begins processing the payments shortly after Biden signs the package. It is currently unclear whether Congress will instruct the IRS to repay the difference for those who receive payments based on their income in 2019 but qualify for more money based on their income for 2020.
David Kautter, who served as a Treasury Department tax officer during last year’s stimulus checks last year, said The Wall Street Journal that the IRS can top up payments after 2020 returns are received. But Kautter noted that the process can be delayed until after tax filing season.
Newsweek contacted the Treasury Department for comment.