Now that President Biden has signed the $1.3 Trillion American Rescue Plan Act into law, Americans should start seeing a payment of $1,400 as early as this weekend.
According to a statement released by the IRS on Friday, the first batch of payments will be sent via direct deposit, with additional payments being sent in the coming weeks. Checks and Debit card payments will be going out in the coming weeks as well, but the vast majority of payments are reaching the recipients through direct deposit.
Who is eligible?
The majority of citizens and resident aliens are available for this third Economic Impact Payment. Unlike the last two payments, this one gives equal amounts to the filer(s) and all their dependents.
For example, a family of four will receive $5,600 or 1,400 times 4, regardless of the ages of their dependents.
The payments are also based slightly more on income this time around. A person’s adjusted gross income can not exceed $150,000 if married and filing a joint return, $112,500 if filing as head of household, or $75,000 if filing as single or married, but filing separate returns. Filers will still get a percentage of the money if making above these amounts though.
A single person with no dependents making between $75,000 and $80,000, for example, will receive half of the full amount, whereas a single person with no dependents with an adjusted gross income above $80,000 will receive no payment.
Heads of households with incomes above $120,000 and widows or married filing jointly with incomes above $160,000 will also not receive any payments.
What do I need to do?
The short answer: nothing. The payments will go out automatically and will be received as the other two payments were received. The eligibility will be based on the most recently accepted tax return of either 2019 or 2020.
If a person’s 2020 tax return has not yet been processed, the IRS will adjust the payments accordingly upon receiving the 2020 tax return.
Individuals that used the special Non-filers portal for last year’s payments are also still eligible for payments and do not need to provide any additional information. If there are citizens or resident aliens that haven’t filed for 2019, 2020, or the non-filer forms, they are also still eligible for all three payments once they have filed their 2020 tax return.
People can also go to the Get My Payment tool to check on their payment status.
Why Stimulus checks?
The ideas of a stimulus check can be confusing for some, what exactly are we trying to stimulate? In the midst of a crisis, stimulus checks don’t necessarily have to serve the purpose of stimulating the economy; they can also be a much-needed lifeline to buy basic necessities and pay bills.
Financial advisors suggest using the aid to pay for necessities when needed, start an emergency savings account if one hasn’t already, or even using it to invest. We can always spend the money later once the financial crisis stabilizes.
Research gives decent evidence that stimulus checks have a “significant, positive effect on employment and growth.” Critics suggest, however, that the apparent benefits would have happened without the stimulus checks anyway, and would save the government from some of its ever-increasing deficit.
Whatever the case, although perhaps not enough for those devastatingly impacted by the pandemic, it can be a temporary lifeline for many that would otherwise go without. For the rest of us that are still able to make ends meet, it can provide the savings or donations we’ve never been able to manage or provide for the economy exactly as it suggests it can.
American citizens and resident aliens should expect a deposit into their bank accounts in the coming weeks. I took a look today and have not yet received my check, we will see how long it takes to reach everyone eligible for it.
Regardless of its amount or opinions of its effectiveness and necessity, I think we can all hope this is the last time this year our economy needs help. Here’s to believing this is the last economic relief package of the year because we can start to see the return to life like it was before this crisis and with it the return of an active economy.