$ 1,400 stimulus checklist: the fine print that can change everything

2021-02-22 08:24:25

Thestimulusverificationformulamaychange,whichcouldchangetheamountofmoneyyoureceiveonathirdpayment.

SarahTew/

ThethirddunningcheckCongressisworkingoncouldtakeadifferentformoffirsttwosetsofstimuluspayments.AndthatgoesbeyondtheobviousdatagreateramountofmoneyPresidentJoeBidenproposes.ThebiggestfinancialchangeformanyfamiliescouldcomethewaywhoseIRSchangestheformulaitusestodeterminetheamountofmoneyyouandyourhouseholdcouldreceive.With$1,400inadultpayments,andanother$1,400foreachdependent,dollaramountsandtheincomelimitsusedintheequationbytheIRSwilldeterminewhetheryougetlargepayment,apartialamountornocheckstimulusion.

Thestimuluscontrolformuladeterminingthesizeofathirdstimuluscheck(thisishowlongitmighttake)willnotbesetuntilCongressapprovesCOVID-19relievethebill.Butweexpectatargethardincomelimitswhichwillexcludesomepeoplewhohavereceivedmoneystimulusduringthefirsttwostimulusroundsin2020.Forexample,underthenewplan,afamilyoffourcouldreceive$5,600,upfromamaximumof$2,400providedbytheSecondcheckfor$600distributedinDecemberandJanuary.

Weexplainhowitworksbelow.Inthemeantime,herearethemainthingstoknowaboutstimuluspaymentsnow,includingwhatispenoughifathethirdcheckarrivesinthemiddleoftaxseason.Thisstoryisregularlyupdated.

Howthecheckformulaworksstimulus

Beforewedelveintohowapotentialthirdstimuluscheckcanchangetheequationandwhattheresultwouldmeantoyou,here'showitworks.Ingeneral,yourtaxreturnisoneofthemostimportantfactorsindeterminingyourstimuluschecktotal.OtherfactorsincludeyouradjustedgrossincomeorAGIandthestimulusverificationformula.Youcanqualifyforastimuluscheckifyouareanon-filerwhodoesnotpaytaxesalso.

Themainvariablesthatthe'IRSinsertsinthestimulusformulaare:

YourAGIbyyourlink2019or2020federalincometaxreturns.
Upperlimitsforsingletaxpayers,headsofhousehold(forexample,asinglepersonwithatleastonechild)andmarriedcouplesdeclaringjointly.
Numberofeligibledependentsthatyourequest.
"Reduction"or"phase-out"-thetotalamountofyourdecreaseforevery$1,000youearnabovetheincomelimitthatallowsyoutobeeligibleforthetotalamountofthecheck.Inotherwords,thispartoftheequationcalculatesapartialpaymentifyouarenoteligibleforthefullamount.

Nowreading:Watchthis:StimulationTest#3:WhatYouNeedtoKnow2:59

Here'showthethirdstimuluscheckcouldchangetheequation

Therecentproposalto"target"thestimuluscheckof$1,400wouldpreventthehighestearnersfromreceivingapartialpayment.Iftheproposalpasses,theconditionswouldbe:

Totalamountof$1,400ifyouearnlessthan$75,000(singletaxpayer);$112,500(headofhousehold);$150,000(married)
Disqualifiedat$100,000(single);$150,000(headofhousehold);200,000USD(married)
Increasingthephase-outratetokeepthisupperlimit
Thesehighearnerswouldnotreceivepartialcheckseveniftheyhavedependents

Thefineprintfordependentsisimportant

WiththetwopreviousstimuluschecksapprovedinMarchundertheCARESlawandtheninDecember,itwaspossibletogetpartialpaymentevenifyouexceededthemaximumincomelimit-ifyouhaddependents.Forexample,let'ssayamarriedcouplewithaAGIof$200,000claimstwodependents.Witha$1,400stimuluscheckthatusesthepreviousformula,thisfamilycouldstillreceiveacheckfor$600.

Thisisbecausethepreviousformulastartswiththethehighestamountyoucouldreceive(forexample,$1,400persingletaxpayeror$2,800forco-filers)andadd$1,400foreacheligibledependent.ThenthisreducesthetotalpossiblesumbasedonyourAGIandtheremovalrate.

It'sabitlikestartingatestwithaperfectscoreof100pointsandsubtractingeverypointyoumiss,"ratherthanstartingwithzeropointsandaddingthemalltotheendofthetest.

$1400relaunchcontrolformula:thesmallcharactersthatcanchangeeverything

MeasureyourpaymentGettingastimuluscheckisnotaneasytask.

AngelaLang/

Butinthiscase,thedependentsyounamecanstartatahighervalue,say110pointsinourexampleclass.Sobythetimeyousubtract"points",youcanstillgetmorethanpeoplewhodon'thavedependents-evenifyourAGIisabovethemaximumcap.Themoredependentchildrenyouhave,thehigheryourstartingvalueandthehigheryourendingvalue.,too.

Theproposaltotargetstimuluscheckswouldsetafirmthreshold,meaningitwouldstartbyassessingyourAGI.Ifyougooverthelimit,itdoesn'tmatterhowmanydependentsyouhave.Youstillwouldn'tbeentitledtoacheck.

Ontheotherhand,afamilywithalargenumberofdependentsandanAGIwithinthelimitscouldstillereceivealargepartialpayment,providedtheyfallbelowthisabsoluteincomelimit.Youcanexperimentwithourstimuluscalculator.

Phase-outandreductionrate:whatyouneedtoknow

Aslidingscaleisinvolvedhere.Withthesecondcheck,forexample,ifyourdataAGIwaslessthan$75,000asasingletaxpayer(meaningnochildren),youwillreceivetLacheckfromtotalraiseof$600.Ifyoudomorethanthat,yourcheckamountwilldecreaseto$87,000,afterwhichyouwouldnolongerbeeligible.

Forthe$1,400stimuluscheck-notethatcouldstillchange-youcouldreceivethefull$1,400ifyouearnlessthan$75,000peryear(yourAGIasthesoletaxpayer),withdiminishingreturnsuptoaLimitof$100,000.YouwillreceiveapartialcheckforanAGIbetween$75,000and$99,900.Again,youcanseethedifferencesinourdata1$400stimuluscontrolcalculators.

Forheadsofhouseholdsandmarriedcoupleswithdependents,theseotherhouseholdmembersareanimportantpart.teoftheequation-uptoacertainpoint(seeabove).

Formoreinformation,herearethemainthingsatknowthedunningchecks.AndseehowSSDIrecipientsandchecks,theelderlyandretireesandpeoplewhoarenotcitizensAmericanzensorlAmericanswhodonotliveintheUnitedStatesmayalsobeeligible,includingfamilieswithmixedstatuscitizenship.

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