The third stimulus check has meant better times for dependents as they can count on a bigger check than earlier. But some families will also be altogether out of the bounty, depending on their annual earnings. Read on and also know how tax breaks can bring some households a bigger stimulus payment.
The third stimulus check has already been paid to more than 90 million Americans. The IRS has already sent out the first round of payments through direct transfers. And if there are many dependents in the family you could get a much bigger payment with a third stimulus check. The count is 13.5 M as more people come under the broader definition of dependents in the most recent round of stimulus payment under the COVID-19 relief scheme.
The third stimulus check is part of the President’s $1.9 T plan that is being paid out, right in the middle of the 2020 tax returns (the last day for filing being on May 17). The definition of dependents has been broadened since the payment of the first two stimulus checks in 2020. You get to know if your dependents have missed out on any part of the first round of stimulus payments. The government also owes you if you have filed your returns before a baby came into your household in 2020. Mixed status households are also in for a minor one-off. People of any age with disabilities will also get a check. But changes in the income structure that defines eligibility could lower the amount in the third stimulus check and even leave your family out of the stimulus payment.
Read on to know about how much the government owes you to dependents both young and older. You get to know the definition of an adult under the stimulus payment scheme. And is a fourth check in the offing. Here’s the latest.
Your Dependent Could Earn You Another Check
Any child below the age of 16 was considered a dependent for purposes of handing out the initial two stimulus checks. Every qualifying dependent added their share to the family. This was irrespective of the total children in the family. The check was for $500 for every member of the family under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the first check and another $600 more in the third stimulus payment approved and paid in December 2020.
But under the new law signed by President Biden this March 11 this year, $1,400 will be paid to every dependent which will be added to the payment sent out to their guardians or parents. This time around adult dependents above 18 and 17-year-olds will get the third stimulus check. The total comes to 13.5 M college-going students, children of any age with various disabilities, and older adults.
The third stimulus check goes only to families below a specified income limit. This time around dependents could lose out on all payments if their families earn above a certain limit. The stimulus payment calculator will help in your calculations. Also know how to work out the Adjusted Gross Income (AGI), which is the gross income less certain deduction stipulated by the IRS.
Every mixed-status family is part of President Biden’s third stimulus plan. So non-citizen parents whose children are US citizens are eligible for the third stimulus check. Such families were denied any payment in the first round of payments if they had filed jointly and had a citizen who was an American citizen. For the second payment, families, where one spouse was an American, could receive payment.
The opening out of the Child Tax Credit of 2020 has given even more money to some families. Age is a critical factor here. Children up to the age of 6 are entitled to $3,600. The amount is $3,000 for those between 6 and 17 if they are part of qualifying families. The payments will be given out periodically between July and December 21.
The dependents’ stimulus payments up to $1,400 are added to the household’s total payment, and they do not get individual checks. The final amount as part of the third stimulus check will depend on the AGI (Adjusted Gross Income).
Does Having More Dependents Equal More Money?
Yes. If a baby was adopted or born in 2020, you are eligible for dependent remuneration from the initial two stimulus payments as part of your 2020 returns. As the previous checks were paid out based on 2019 returns, parents missed out on the stimulus payments for those babies.
You can claim this payment under the Recovery Rebate Credit as part of your 2020 returns. The amount is $500, the dependent stimulus payments as part of the CARES Act, and $600 for the payment in December 2020.
Filing your 2020 returns before the May 17 deadline will help you get the money as part of the third stimulus check. Otherwise, you will have to wait a year till you file the returns in 2022 to claim the amount. An IRS tool will help you know who among your children and relatives can be counted as a dependent.
Taxation For Dependents
For purposes of tax calculation, a dependent is categorized as either a qualifying child or relative, depending on certain requirements by the IRS. A qualifying kid must be less than 19 or 24 if they are a student by the end of a year. But children classified as totally permanently disabled will be considered dependent, whatever be their age.
An older relative dependent for care will be included. You can find out about older relatives here. For the third round of payments, dependents of every age can add a $1,400 check payable to each household.
The child qualifying as a dependent for more than a person can be claimed only by one person. The IRS has stipulated the qualifications. The parent with whom the child resided for the better part of the year will claim them as a dependent. Parents who have dual custody, but are not parents and claim the child as dependent in alternative years can claim for both of the first rounds of the stimulus payment of $1,100 ($500 and $600).
The IRS rule for defining the group for tax purposes is ‘permanently and disabled.’ The child will count a dependent if they are not able to take on any substantial rewarding activity as a result of their state. A doctor should certify that the condition is expected to continue for at least one year and can even turn fatal.
If you have received any payments for a dependent listed for the first check as you have failed to update your information with the IRS, you will have to return it. You will get all the details regarding the third stimulus check and how you can claim your payment of the first two checks along with the third.