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Wednesday, September 28, 2022

Third Stimulus Check: The Answer To Questions Regarding The Covid-19 Relief Bill

Americans can expect to start receiving their third stimulus check, as the pandemic relief bill is just a Presidential signature away from becoming law. If precedents are anything to go by, People could start receiving their check within a week. This will be a much-needed boost after a year of the severe financial crisis that has grounded most of America.

We will soon get to know the details of the package as President Biden has signed the Rescue Plan. So the Bill is now officially law a day earlier than expected. The president said that these relief plans should help build the moral fiber of the country. He said that it ought to give those who have lost much a second chance to get back on track.

Who Are Expected To Get It The Earliest

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It is exactly a year since the WHO declared the worldwide pandemic. The press secretary of the White House, Jen Psaki told reporters on Wednesday in Washington that people could expect to receive the direct deposits of their stimulus check-in at their banks. People who file their tax returns can expect it sooner as the tax authorities have the financial details of such people.

Others will receive preloaded cards and paper checks, but it will take some time to reach them.

Third Stimulus Check
Third Stimulus Check

There Are Measures Other Than The Third Stimulus Check

But the third stimulus check is not the only relief that people can expect from the gigantic relief package. Every distressed sector of the economy has been considered and will stand to benefit from the package.

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The third stimulus check is the largest piece of the package. But there are other linked benefits for people who have lost their jobs with the imposition of lockdown. People will also indirectly benefit from massive support to vital areas of the economy. Tax experts and others in the know are awaiting further lucidity from the IRS regarding the exact nature of the rollout.

The first people to receive the package will be the taxpayers as their records are already with the IRS. And they can expect it within a week.

The Treasury could send out electronic instructions for the transfer of the third stimulus check beginning Friday. But the transfer would likely not take place immediately.

One factor that could delay the amount is that we are smack in the middle of the tax filing period and that could delay the process.

March 17 could be when the actual transfer takes place, said, financial experts. The total amount of payments in the first installment could be $100 million. Consumers need to keep an eye on their bank account.

Amounts Disbursed In The First Two Rounds

The previous rounds of despatches had reached 233 million accounts last year in spring and winter. The amounts received were $1,200 and $600.  Pre-loaded debit cards and paper checks will take a little longer to reach through the mail. 64.2 million Checks were issued and nearly 12 million pre-loaded cards for those whose records were not available with the IRS. It will take the whole of April for the completion of this part of the process. This was disclosed by Garrett Watson, a policy analyst with the Tax Foundation.

The IRS revealed details on Wednesday that they were reviewing the 2021 American Rescue Plan Act. The IRS disclosed that details regarding the Economic Impact Payments available on IRS.gov as soon as they receive the Presidential nod.

Who Are Eligible For The Third Stimulus Check?

Individuals earning less than $75,000 per year will be eligible for the full amount. But the phase-out is a lot quicker as individuals earning $80,000 and above will not be entitled to the check.

Married couples with no children will get $2,800 if they file a joint tax return and their earnings are below $150,000. Here the phase-out ends for those earning #160,000 and above.

Individuals and families who have yet to submit their 2020 tax returns will have their payout calculated on the 2019 return.

Calculating The Amount Expected Under The Third Stimulus Check

The payout will begin to immediately decrease once earnings go up below the cut-out amount. Even for someone earning $78,000, an increase of just $3,000 could see their share of the Third Stimulus Check shrink by a whopping 60%. It could shrink/ to as low as $560.

Heads Of Household

The cut-off figure for Households heads having a college-going dependant is $120,000.

Are Adult Dependents Eligible For The Third Stimulus Check

As part of the most recent program, even adult dependents above the age of 17 years are eligible for additional payments.

Under the third stimulus check, every dependent is eligible for the maximum amount of $1,400. So college students living with their family and the elderly qualify for the maximum amount.

But the AGI of families should be less than the maximum of $150,000 else it will start to phase out completely.

Will Any Family Be Completely Denied The Third Stimulus Check?

Yes, families whose combined income exceeds the cutoff figures will receive less or nothing at all. 6.5 M people who were beneficiaries during the first two phases of the payment will be denied a share in this year’s check.

Third Stimulus Check
Third Stimulus Check

Tax Break Benefitting The Jobless

Millions of people enjoyed unemployment reimbursement in 2020. As factories, restaurants, and other sectors were shut down for the lockdown. The latest tax break will benefit such workers.

Individual taxpayers with AGI of $75,000 in the previous year and having received jobless benefits totaling $10,200 during the layoff period could have that amount waived for tax purposes. Single taxpayers are in the 22% group. People who have filed their returns might have to wait for assistance from the IRS.

Taxes are held back at a 10% rate for taxes withheld on benefits for the jobless. So for the benefit of $10,200, $1,200 in taxes would have to be held back. This money will cover the taxes owed. People who did not hold back taxes might pay the taxes owed on benefits over the waiver amount of $10,200.

2,361,468 citizens received benefits in Michigan alone as per data released by the Unemployment Insurance Agency.

People who have endured lengthy layoffs in 2020 might still owe taxes on the benefits. The Department of Treasury of Michigan has approved a waiver of every penalty and other interests linked to low-paid estimated payments payable by taxpayers beneficiaries in 2020.

The Child Tax Credit

The modifications associated with the Child Tax Credit will have no impact on the 2020 return but will help this year.

Under new rules $3,600 of the child tax credit for children up to 5. From 6 to 17 it is $3.000.

Households without tax to offset are limited to $1,400 in refunds. But now the tax will be refundable and available to households without income. Individuals’ parents can receive complete credit if the AGI is below $75,000. The corresponding figure is $150,000 for married couples. The credit gets phased out totally when the AGI starts at $200,000 and for married couples filing jointly, $400,000.

Another positive is that families would not need to wait for a year but could receive the %300 for each child by the second half of this month.

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